Report No.

29506

INDONESIA

EDUCATION IN INDONESIA:
MANAGING THE TRANSITION TO
DECENTRALIZATION
(In Three Volumes) Volume 1

The World Bank

August 2004
 TABLE OF CONTENTS
Volume 1

Page

FOREWORD viii
ACKNOWLEDGEMENTS ix
EXECUTIVE SUMMARY x

CHAPTER 1: INDONESIA’S EDUCATIONAL PROGRESS AND CHALLENGES 1

Enrollment Expansion 1
Educational Challenges 2
Closing Large Regional Gaps 2
Reducing Inequality across Income Groups 3
Improving the Quality of Education 3
Decentralization: Promise or Peril for Education? 4
Topics for this Review 5
Governance and Management 6
Finance and Public Spending 6
Education Quality 6
Teacher Management 6

CHAPTER 2: GOVERNANCE AND MANAGEMENT 9

Legal Framework and Governance Structures 9
Basic Challenges in Governance and Management 9
Clarifying Governance Functions 10
Rebuilding Management Systems 11
Reframing the Role of the MoNE 13
Building Local Capacity 13

CHAPTER 3: FINANCE AND PUBLIC SPENDING 17

Financing Framework And Structures Under Decentralization 17
Expanding the Resource Envelope for Education 18
Making Education Expenditures Count 20
Spend Locally 21
Differentiate Assistance to Districts and Schools 21
Spend More Resources on Those Most in Need 22
Leverage Governmental Resources – But Consider Consequences of the Poor 24
Track and Monitor Spending 24

CHAPTER 4: QUALITY ASSURANCE AND IMPROVEMENT 27

Two Approaches to Improving Quality 27
Quality Assurance or Control 27
 Quality Improvement 29
Policies to Improve the Quality of Education 32
Support National-Programs, District Projects,
and School-Improvements 32
Adapt a Balanced Scorecard Approach to Plan and Manage Support
to Districts and Schools 33
Address Structural Weaknesses of the System 34
Ensure Equity in Quality Improvement 35
Stimulate Demand for and Supply of Innovations and Good Practice
for Improving Teaching 35
From Setting Standards to Meeting Standards 35

CHAPTER 5: TEACHER MANAGEMENT AND PERFORMANCE 37

Management Changes Under Decentralization 37

Responsibility for Teacher Employment and Deployment 37
Responsibility for Setting and Monitoring Teacher Performance Standards 38
Responsibility for Teachers’ Professional Development and
Career Development 39
Teacher Employment and Deployment 39
Teacher Professional Development 41
Teacher Compensation and Incentives 43
Using Teacher Management Systems to Achieve Education Goals 44

CHAPTER 6: THE WAY FORWARD: MAKING DECENTRALIZATION WORK

FOR EDUCATION 47
A Policy Reform Agenda 47
Implementing the Policy Agenda 52
Supply-Side and Demand Led Progress 52
Learning from Past and Ongoing Efforts 53
REFERENCES 61

ii
 TABLES IN TEXT

Table 1.1 Rising education enrollment rates at all levels, 1995-2002 1

Table 1.2 Inequality in enrollment rates: wider gaps within than between
provinces, 2002 2
Table 1.3 Education equality at the primary level and increasing equality
at higher levels: Net enrollment rates by income quintile, 1993-
2002 3
Table 1.4 Student performance on mathematics and science tests: ranking
among 38 countries 4
Table 1.5 Some challenges and issues in implementing decentralization in
education 7
Table 3.1 Sources of local revenues, fiscal year 2001 17
Table 3.2 Per capita education spending, 2001-2002 19
Table 4.1 School committees still not fully engaged 31
Table 5.1 Primary teacher absence rate in public schools, 2002-03 39
Table 5.2 A proposed national framework for a teacher management
system 46
Table 6.1 Proposed policy agenda for educational development under
decentralization 54

FIGURES IN TEXT

Figure 1.1 Gross and net enrollment rates in East Asian countries, 2000 1
Figure 1.2 Highest grade completed by 16-18 year olds, by income quintile 3
Figure 2.1 Flows of governance and managerial accountability in
decentralized Indonesia 10
Figure 3.1 Indonesia: Education spending by level of government, 2001 20
Figure 3.2 Relationship between two dimensions of educational
development 22
Figure 4.1 Balanced scorecard to determine appropriate action for each
district/unit 34
Figure 5.1 Districts vary in proportion of primary teachers with minimum
training qualification, percentage of teachers 41

BOXES IN TEXT

Box 2.1 Information systems and management in Brazil and Spain 12

Box 2.2 Transforming the current organizational structure of the
Ministry of National Education 14
Box 4.1 Minimum service standards 28
Box 4.2 Improving the quality of madrasah education 30
Box 5.1 A new teacher deployment scheme in the Philippines 42
Box 5.2 Mexico’s Carrera Magisterial program 43
Box 5.3 Brazil’s FUNDEF program and teacher compensation reform 45

iii
 TABLE OF CONTENTS
Volume 2

CHAPTER 1: GOVERNANCE AND MANAGEMENT UNDER DECENTRALIZATION 1

The Situation as Decentralization Gets Under Way 2
The Basic Challenge: Clarifying Governance and Management Functions 7
Are Current Policies Helping? 12
Minimum Service Standards 14
Governance and Management Systems Lacking 15
Governance and Management Development Tasks 20
References for Chapter 1 22
Appendix 1.1 List of Governance and Management Problems 25
Appendix 1.2 List of Interviewees 28
Appendix 1.3 Decentralization Case Studies 30
Appendix 1.4 Citizen Perception and Educational Reality: Insights
from the Governance and Decentralization Survey 37
Appendix 1.5 Organizational Issues for DEPDIKNAS Under Decentralization 47
Appendix 1.6 Minimum Service Standards as Management and
Governance Tools 56

CHAPTER 2: FINANCING EDUCATION UNDER DECENTRALIZATION 65

New Fiscal Structures under Decentralization 65
Public Spending for Education at the National and Local Levels 68
Private Spending for Education Remains Low 71
Equitable Financing in an Unequal World 73
Increasing Efficiency Under Decentralization 76
Summary of Implications for Policy 80
References for Chapter 2 84
Appendix 2.1 Cost Implications of Quality Education for All 86

CHAPTER 3: QUALITY ASSURANCE AND IMPROVEMENT 89

Approach and Rationale 89

Methodology 90
Basic Terms 91
Quality Management 91
Quality Assurance 99
Quality Improvement 104

iv
 Conclusions and Summary of Recommendations 111
References for Chapter 3 112
Appendix 3.1: Quality Improvement Projects in Indonesia Since 1990 115
Appendix 3.2: A Quality Management Model 121
Appendix 3.3: A Case Study of Project-Based School Rehabilitation 125

CHAPTER 4: TEACHER MANAGEMENT SYSTEM 127

The Changing Context of Teacher Management in Indonesia 128
Transparent Employment Processes and Conditions of Service 137
School-oriented Performance Standards and Monitoring 146
Career-Long Professional Development 149
Using Teacher Management Systems to Achieve Education Goals 153
References for Chapter 4 156
Appendix 4.1: What Teachers Need to Know and be able to Do 160
Appendix 4.2: Supplementary Information on International Experience 161

TABLES IN TEXT

Table 1.1 Diagnosis of governance, management, and related

decentralized challenges 3
Table 2.1 Public expenditures for education: How does Indonesia compare
with other Asian countries? 69
Table 2.2 Household expenditures on education, by income quintile, 2002 72
Table 2.3 Source of inequality in enrollment rates: Between and within
provinces 73
Table 2.4 Determinants of education expenditures using APBD: Results
from regression analysis 75
Table 3.1 Common uses of national and school-based tests in quality
assurance 97
Table 3.2 Comparing the school effectiveness and school reform
approaches 106
Table 4.1 Teacher management functions for public schools (except
Madrasahs) after decentralization 134
Table 4.2 Average number of hours worked per week 142
Table 4.3 The impact of corrupt practices with the education sector 144
Table 4.4 Comparing two teacher performance evaluation systems in Chile 149
Table 4.5 Potential policy tools for managing the teaching workforce 154

FIGURES IN TEXT

Figure 1.1 Flows of governance and managerial accountability in a

decentralized Indonesia 8
Figure 2.1 Post-decentralization financial structure 66
Figure 2.2 Education expenditures, 2001 71
Figure 2.3 Enrollment rates of children ages 12-15 by province 73

v
 Figure 2.4 Inequality in the distribution of 2001 education expenditures
from APBD and APBN allocations 74
Figure 3.1 Diagram of quality management system 92
Figure 3.2 Relationships between standard-setting entities being developed 94

BOXES IN TEXT

Box 1.1 In South Africa, a lack of definition as to who could set

minimum standards, combined with sectoral collusion in teacher
management, led to the emergence of unfunded mandates and
fiscal problems after decentralization 18
Box 1.2 In Brazil and Spain, devising good management information
systems under decentralization was difficult and problematic but
was possible with effort and partnership 19
Box 2.1 Unequal education spending among districts 72
Box 2.2 Brazil’s experience with municipalization 77
Box 2.3 School funding – A gap in financial policy 80
Box 3.1 Hypothetical use of performance information in a school 92
Box 3.2 Information from a national evaluation system changed the
focus of debate in Brazil 98
Box 3.3 Quality assurance of the teaching force 101
Box 3.4 The New Zealand equalization program 108
Box 3.5 School development plans and quality inputs 110
Box 4.1 Cost-effective strategies for raising academic achievement 130
Box 4.2 Permanent or contract teachers? 145
Box 4.3 The importance of teacher quality 147
Box 4.4 International evidence on schooling, resources, educational
institutions and student performance 148
Box 4.5 Teacher education programs that made a difference 151
Box 4.6 Mexico’s incentive scheme for teacher development 153

vi
 TABLE OF CONTENTS
Volume 3
Table 1 Highest Level of Education as a Percentage of the Population, by Location 1
Table 2 Net and Gross Primary Enrollment Rates, by Gender 3
Table 3 Net and Gross Junior Secondary Enrollment Rates, by Gender 4
Table 4 Net and Gross Senior Secondary Enrollment Rates, by Gender 5
Table 5 Net and Gross Primary Enrollment Rates, by Location 6
Table 6 Net and Gross Junior Secondary Enrollment Rates, by Location 7
Table 7 Net and Gross Senior Secondary Enrollment Rates, by Location 8
Table 8 Percent of Primary Students Enrolled, by Type of School 9
Table 9 Percent of Junior Secondary Students Enrolled, by Type of School 10
Table 10 Percent of Senior Secondary Students Enrolled by Type of School 11
Table 11 Adult Literacy Rates 12
Table 12 Primary School Classrooms and Teacher Profiles 13
Table 13 Teacher Profile in Junior Secondary Schools 14
Table 14 Teacher Profile in Senior Secondary Schools 15
Table 15 Test Scores of Junior Secondary Students 16
Table 16 Test Scores of Senior Secondary Students 17
Table 17 Average Monthly Household Income 18
Table 18 Education Expenditure as a Proportion of Total Household Expenditure 19
Table 19 National Education Development Expenditure, 2001 20
Table 20 Gross Regional Domestic Product at Current Market Prices, 1998-2000 21
Table 21 Per Capita Provincial Revenues, 2001 22

vii
 FOREWORD
Improving the lives of its citizens is at the
center of Indonesia’s development
challenge. Economic growth creates more
jobs and reduces hunger and poverty, but it
is clearly not enough. It is widely
recognized that being literate, more skilled,
and more knowledgeable about the world
also gives people the capacity to control and
to enrich their lives. For this reason, it is
important that Indonesia continues to raise
educational levels, especially for poor and
disadvantaged people.
Schooling will count for more when its
quality is improved. Indonesia achieved
significant progress in bringing children to
school during the last 30 years. Enrollment
rates at the basic levels are high, even as
compared to countries with higher incomes.
The key challenge now is to raise the quality
of education available to young people so
that they are well prepared to participate in
Indonesia’s ever more dynamic society and
economy. Schools must be well managed,
staffed with motivated and competent
teachers, and supported by a system that
both provides resources and requires
accountability.
Indonesia continues to make important
changes at all levels of education. In
Andrew Steer
Country Director for Indonesia, World Bank
viii
particular, significant steps have been taken
to decentralize authority for managing
education to local government and to build
partnerships with civil society to improve
the quality of schooling. While we join the
education community in applauding these
steps, we recognize too that many other
policies and actions are needed.
This Education Sector Review discusses the
issues and the range of options for policies
and actions around the issues of
management and governance, financing,
teachers, and quality of the education
system. It specifically addresses the complex
and changing nature of the relationships
between central and local governments that
have resulted from Indonesia’s
decentralization process. The Review is a
collaborative undertaking by Government
and donors, and its broad consultation
process with many of stakeholders at the
national and local levels gives us also the
perspective of those who are closest to the
schools and the classrooms and has fuelled
profound discussions on the key challenges
of the sector. We trust that the reader will
find this report stimulating and enriching
reading.
David Ritchie
Australian Ambassador to Indonesia
 ACKNOWLEDGEMENTS
This report was prepared by a team consisting of
Audrey Aarons, Luis Crouch, Susiana Iskandar,
Jennica Larrison, H. Moegiadi, Fredi Munger,
Jerry Strudwick, Suheru Muljoatmodjo, and
Elizabeth King (Team Leader). It also benefited
from the helpful advise and generous
contributions of a large number of people—
many national education officials at all levels,
advisors to the government, regional
government officials, school personnel and other
stakeholders in various districts outside Jakarta.
For their time, advise, and candor throughout the
process of preparing this report, we are grateful
to the national education leaders, Baedhowi,
Secretary General, Ministry of National
Education; Boediono, now former Head of
Research and Development, Ministry of
National Education; Herwindo Haribowo,
Secretary, Research and Development, Ministry
of National Education; Indra Djati Sidi,
Director-General, Primary and Secondary
Education, Ministry of National Education; Fasli
Jalal, Director-General, Non-Formal Education;
Satryo Soemantri Brodjonegoro, Director-
General, Higher Education; Ace Suryadi, Senior
Adviser to the Minister, Ministry of National
Education; Nina Sardjunani, Director, Education
and Religious Affairs, National Planning
Agency; A. Qodri Azizy, Director-General,
Development of Islamic Institutions, Ministry of
Religious Affairs; Bambang Indriyanto, Head,
Policy Research Center, Research and
Development, Ministry of National Education;
and a group of young technocrats in government
who are committed to Indonesia’s educational
development (Hamid Muhammad, Abdul Azis,
Renani Pantjastuti, Harris Iskandar, Suharti,
Totok Suprayitno, Ratna Kesuma, Agung
Purwadi, Agus Hariyanto, Yun Widiati, Slamet
Soleh, Husaini Wardi, Ninasapti Triaswati, and
Herry Sukarman). We thank Joel Friedman,
Frank Hijmans, Walter McMahon, and Blane
Lewis, technical advisers in the Ministry of
Home Affairs, Ministry of Education, and
Ministry of Finance; David Sloper; peer
reviewers at the World Bank, Marlaine
Lockheed, Lant Pritchett, and Haneen Sayeed,
and other colleagues including Vivi Alatas,
Michael Borowitz, Deon Filmer, Scott
Guggenheim, Bert Hofman, Robin Horn,
Emmanuel Jimenez, Kai Kaiser, Samuel
Lieberman, Jessica Poppele, Fadia Saadah,
Andrew Steer, and Christopher Thomas for their
comments on earlier drafts; Owen Haaga and Ali
Subandoro for their very able research
assistance; Fiona MacKintosh for her editorial
contributions; and Elsa Warouw, Idawati
Harsongko, Dinni Prihandayani, Datty
Sembodo, Dety Palimbong, Imani Rasheeda
Haidara, and Dorothy Judkins for helping the
office processes go smoothly.
We acknowledge the faithful and vigilant
support of the donor community in Indonesia—
Asian Development Bank, Australian Agency
for International Development, European Union,
the Royal Netherlands Government, UNESCO,
and UNICEF—and especially the funding
assistance given by AusAID and the Royal
Netherlands Government for the preparation of
the report and the subsequent regional and
national consultation activities. Lastly, this
report benefited significantly from the comments
of many more leaders and experts who attended
the various consultative meetings that were
organized during the preparation of this report.
The Team wishes to honor the memory of Dr. H.
Moegiadi, professor, mentor, colleague, and
friend to many education leaders in Indonesia.
Dr. Moegiadi, who was part of the report team
during his last days, enriched the report with his
vision of educational development in Indonesia
and his experiences in working for that vision
while in government.
 ABBREVIATIONS AND ACRONYMS
Acronym /Term Bahasa Indonesia English Equivalent

ADB Bank Pembangunan Asia Asian Development Bank

AKU Arah Kebijakan Umum General Policy Directions
APBD Anggaran Pendapatan dan Belanja Daerah Provincial or district budget

APBN Anggaran Pendapatan dan Belanja Negara National budget

APPKD Anggaran Penerimaan dan Pengeluaran Kas Desa Village budget
ASEAN Association of South East Asian Nations
AusAID Australian Agency for International
Development
BAPPEDA Badan Perencanaan Pembangunan Daerah Regional Development Planning Board
BAPPENAS Badan Perencanaan Pembangunan Nasional National Development Planning Agency

BAS Badan Akredetasi Sekolah School Accreditation Body

BKN Badan Kepegawaian Negara Civil Service Board

BO Biaya Operasi Sekolah School operation fund
BOMM Bantuan Operasional Manajmen Mutu Operational Assistance for Quality
Management
BP3 Badan Pembantu Penyelenggaraan Pendidikan Parents' association
BPS Biro Pusat Statistik Central Bureau of Statistics
Bupati Head of district
Camat Head of sub-district
CBBEP Community-Based Basic Education Project
CGI Consultative Group for Indonesia
CIDA Canadian International Development
Agency
CLCC Creating Learning Communities for
Children
COPSEP Community Participation in Strategic
Education Planning for School
Improvement (JICA)
DAK Dana Alokasi Khusus Special allocation fund
DAU Dana Alokasi Umum General allocation fund
DBEP Decentralized Basic Education Project
DBO Dana Bantuan Operasional School block grant
DEPDAG Departemen Agama Ministry of Religious Affairs
DEPDAGRI DDN - Departemen Dalam Negeri Ministry of Home Affairs
DEPKEU Departemen Keuangan Ministry of Finance
Desa Village
DFID Department for International Development
(United Kingdom)
DIK Daftar Isian Kegiatan Routine or recurrent budget of a central
ministry
Dinas A Provincial, District, Sub-District Office
with sectoral responsibility
Dinas P & K Dinas Pendidikan dan Kebudayaan Provincial, District, Sub-District Education
Office with responsibility for education
DIP Daftar Isian Proyek Development budget of a central ministry
DISD Directorate for Islamic Schools
Development (MORA)
DPR Dewan Perwakilan Rakyat Legislative Assembly
DPRD Dewan Perwakilan Rakyat Daerah Regional Legislative Assembly
DSSD Capacity Building for Decentralised Social
Services Delivery (ADB)
EBTANAS Evaluasi Belajar Tahap Akhir Nasional National end-of-level examination
(formerly used)
EFA Education For All
ESR Education Sector Review (this Review)
EU Uni Eropa European Union
Gaji Salary and wages
GER Angka Partisipasi Kasar Gross enrolment rate
GOI Government of the Republic of Indonesia
GTZ Gesellschaft für Technische
Zusammenarbeit (Germany)
Guru Teacher
GPN Guru Pegawai Negeri Government teacher
HRD Human Resource Development
IKIP Institut Keguruan dan Ilmu Pendidikan Teachers College
INPRES Instruksi Presiden Presidential Instruction
JBIC Japan Bank for International Cooperation
JICA Japan International Cooperation Agency
JPS Jaring Pengaman Sosial Social safety net program
JSE Pendidikan Lanjutan tingkat Pertama Junior secondary education
JSS SMP – Sekolah Menengah Pertama Junior secondary school
Kabupaten Kabupaten District
Kacab Kepala Cabang Branch Head
Kades Kepala Desa Village Head
Kadin P & K Kepala Dinas P & K (Diknas) Kecamatan Head of the Sub-District Education and
(Diknas) Culture Office
Kecamatan
Kakancam Kepala Kantor Kecamatan Head of Sub-District office of central
Government ministry
Kakandep Kepala Kantor Departemen (Kabupaten) Head of District Office of Central
Government Ministry
Kakanwil Kepala Kantor Wilayah (Propinsi) Head of Provincial office of central
Government ministry
Kakua Kepala Kantor Urusan Agama (Kecamatan) Head of Sub-District Office of Religious
Affairs
Kancam Kantor Kecamatan Sub-District office of central Government
ministry
Kandep Kantor Departemen District office of central Government
ministry
Kandep Diknas Kantor Departemen Pendidikan Nasional (P & District Education Office
K)
Kanin Kantor Inspeksi Inspection Office
Kanincam Kantor Inspeksi Kecamatan Sub-District Inspection Office
Kanwil Kantor Wilayah Provincial office of central Government
ministry
Kecamatan Sub-district
Kelompok Group
Kepala Desa Village head
Kepmen Keputusan Menteri Ministerial Decree
Keppres Keputusan Presiden Presidential Decree
KKKS (K3S) Kelompok Kerja Kepala Sekolah Principal's working group
Kota Autonomous city
KW Kewenangan Wajib (UU 22/99) Obligatory Functions (Law 22/99)
Kyai Veneration title for Islamic religious teacher
or leader
LKGI Latihan Kerja Guru Inti Training program for core teachers
LKMD Lembaga Ketahanan Masyarakat Desa Village community development council
LMD Lembaga Musyawarah Desa Village council
LPMP Lembaga Penjamin Mutu Pendidikan Education Quality Assurance Institution
Lurah Village head (in urban area)
LSM Lembaga Swadaya Masyarakat Non-Government Organization
Madrasah Islamic school
MBBS Manajemen Berbasis Sekolah School Based Management
Menpan Menteri Pendayagunaan Aparatur Negara Ministry of State Personnel
MESA SPPM (Studi Pengembangan Sub- Sektor Madrasah Education Sector Assessment
Pendidikan Madrasah ) study (ADB/AusAID)
MGMP Musyawarah Guru Mata Pelajaran Meeting of Working Group of Subject
Teacher of Secondary Schools
MI Madrasah Ibtidaiyah Islamic primary school
MKKS Musyawarah Kerja Kepala Sekolah Meeting of Principals' Working Group
MOF DEPKEU - Departemen Keuangan Ministry of Finance
MOHA DEPDAGRI - Departemen Dalam Negeri Ministry of Home Affairs

MONE DEPDIKNAS - Departemen Pendidikan Ministry of National Education

Nasional
MORA DEPAG - Departemen Agama Ministry of Religious Affairs
MSS SPM - Standar Pelayanan Minimal Minimum service standard
MTs Madrasah Tsanawiyah Islamic junior secondary school
MPR Majelis Permusyawaratan Rakyat People's Consultative Assembly
Negeri State / national
NER Net enrolment rate
NGO LSM - Lembaga Swadaya Masyarakat Non-Government Organization
NZDA New Zealand Development Assistance
LSM Lembaga Swadaya Masyarakat Non-Government Organization
PAD Pendapatan Asli Daerah Regional own source revenues
Pejabat Functionary, government officer
PERDAS Peraturan Daerah Local regulations
Pesantren Islamic boarding school
PIU UPP - Unit Pelaksanaan Proyek Project implementation unit
PP Peratuan Pemerintah Government Regulation
PROPEDA Program Pembangunan Daerah Regional Development Program
PROPENAS Program Pembangunan Nasional National Development Program
PROPEDATA Program Pembangunan Daerah Tahunan Regional Development Annual Program
RAPBS Rencana Anggaran Pendapatan dan Belanja School revenue and expenditure plan
Sekolah
REDIP Regional Educational Development and
Improvement Program (JICA)
Rp Rupiah Indonesian currency unit
SBM MBBS - Manajemen Berbasis Sekolah School Based Management
SD Sekolah Dasar Primary school

SLTP Sekolah Lanjutan Tingkat Pertama Junior secondary school

SLTP Terbuka Sekolah Lanjutan Tingkat Pertama Terbuka Open junior secondary school
SPM Standar Pelayanan Minimal (MSS) Minimum service standards
SPPM Studi Pengembangan Sub-sektor Pendidikan Madrasah Education Sector Assessment
Madrasah study (ADB/AusAID)
SSA SAB - Standar Analisa Belanja Standard Spending Assessments
SUSENAS Survei Sosial Ekonomi Nasional National Socio-Economic Survey
Swasta Private
TFEA Targeted Funding for Educational
Achievement (New Zealand case )
TPK Tim Pengembangan SLTP Kecamatan Sub-district Junior Secondary School
Development Team
UAS Ujian Akhir Sekolah Final school test (set nationally, marked at
schools)
UNDP United Nations Development Programme
UNESCO United Nations Educational, Scientific, and
Cultural Organisation
UNICEF United Nations International Children's
Fund
USAID United States Agency for International
Development
UU Undang-Undang Law
Walikota Mayor
WB Bank Dunia World Bank
WHO World Health Organisation
WTO World Trade Organisation
Yayasan Private Non-profit Foundation
 EXECUTIVE SUMMARY
Indonesia’s population of school-age children is
one of the largest in the world. A sustained
drive to build schools across the country since
the 1970s has resulted in more and more of those
children attending school every year. This is an
impressive accomplishment. But there is a
widespread perception that several critical
barriers have prevented Indonesia from
achieving its goals of: (i) enrolling all students
through to the end of junior secondary level, (ii)
ensuring that poorer and disadvantaged children
have full and equal access to schools that
provide a safe and healthy learning environment
and effective instruction, and (iii) providing
education that is of acceptable quality and is
relevant to the economy and society.
First, behind the impressive increase in
enrollment at the national level, wide regional
differences remain, which means that the
likelihood of reaching junior secondary school is
very different for two young Indonesians, one
who resides in a well-to-do community in
Yogyakarta and the other in a poor rural area in
South Sulawesi. And even larger than this
between-province variation are disparities
among districts within provinces.
Second, although Indonesia’s enrollment
expansion closed the enrollment gap between
males and females and across income groups,
especially at the primary education level,
striking inequalities between richer and poorer
children remain at the junior secondary and
senior secondary levels. While nearly all
children enter the early primary grades, those
who belong to the poorest income quintile drop
out first, thus completing much less than full
basic education, on average.
Third, the quality of schooling in Indonesia is
low and declining, and it is worst in the poorest
parts of the country. Decades of rapid expansion
of enrollment have not produced graduates with
the consistently high quality of knowledge and
skills needed to build a strong society and
competitive economy. Underlying the quality
x
problem is the failure to provide students with
the rudiments of instruction—textbooks, a
blackboard, writing supplies, and a teacher who
has mastered the curriculum and regularly
comes to class.
Because Indonesia’s school system is immense
and diverse, it will be necessary to understand
these problems as they manifest themselves
across all of the regions of the country and
across all of its demographic groups, searching
for factors that explain the low quality of
education.
Decentralization
Indonesia’s ambitious decentralization program
is transforming the nature and level of public
service delivery, including education. How
decentralization applies to the education system
has been defined in Education Law 20/2003,
which transfers the principal responsibilities,
authority, and resources for the delivery of
education to lower levels of government, while
some decisionmaking power is transferred to
schools themselves.
There are four key conditions for
decentralization to overcome barriers and
stimulate educational development: (i) clear
division of responsibilities and power among the
different levels of government, (ii) greater
decisionmaking power and autonomy to local
governments, (iii) greater voice of teachers and
parents on how schools operate, and (iv)
effective accountability mechanisms and
financial structures that are consistent with
educational goals. By distributing power and
responsibility more widely throughout the
education sector, decentralization has the
potential to increase the efficiency of the system
and its responsiveness to the needs of its
constituencies. The freedom to experiment is
another potential benefit from decentralization,
and locally generated innovations can stimulate
continuing improvements in education if a
region can learn from the experiments carried
out in other regions.
However, despite its promising aspects,
decentralization is not a policy panacea.
Conflicts and inefficiencies can sometimes arise
when the goals of the different levels of
governments contradict each other. And even
when everyone’s goals are aligned, paternalistic
behavior left over from decades of centralistic
policymaking, on the one hand, and the extreme
dependency of some areas, on the other, can be
hard to change simply by edict. Inevitably, there
will be lags and variations in implementing
decentralization across the country. Thus, the
process of reform is likely to be a slow one,
punctuated by bursts of progress and frequent
setbacks that may lead to rising frustration and
mistrust among stakeholders if they do not
understand that these are inherent aspects of the
reform process.
The Challenges of Implementation
Like other countries that have decentralized their
education system, Indonesia faces many
implementation challenges. However, most of
these challenges really stem from two
fundamental problems—unclear, incomplete,
and inappropriate assignment of governance and
management functions and a shortage of the
management and technical skills needed to
operate a decentralized education system.
Numerous questions about decentralization have
emerged with its implementation. This review
focuses on four broad issues.
Governance and Management. Will the shift in
authority, responsibilities, and resources from
the central level to district governments and
communities help to achieve the desired
education outcomes in Indonesia? This depends
on how certain design and implementation
issues regarding governance and management
systems are resolved. These include how the
relationships between district governments and
district- and school-level service providers
change; what are the functions and roles of the
large number of decisionmaking bodies in the
sector; whether local government officials and
school staff have the capacity and skills to fulfill
their devolved functions and responsibilities;
and whether the central agencies are ready and
xi
able to restructure and re-equip themselves to
undertake their new roles.
Finance and Public Spending. Decentralization
has shifted the flow and allocation of fiscal
resources from the national government to the
district governments and from the district
governments to the schools. Are the fiscal
resources for education sufficient? Are these
resources being used more efficiently and more
equitably than before? How can the use of
resources be improved? What are the
implications of the new fiscal arrangements at
the school level and thus on educational
outcomes?
Education Quality. Under decentralization,
improving quality will mean identifying those
institutional arrangements (such as standards,
structures, and incentives) that will improve
performance and accountability. What then are
the best ways to raise quality in the context of
local autonomy? How can performance
standards be set, measured, and monitored
throughout the education system?
Teacher Management. In Indonesia, as
elsewhere, teachers are a critical element in the
process of educational development and,
reflecting this, their salaries and benefits account
for the bulk of resources spent on education.
How will decentralization affect the incentives
faced by teachers, how will it determine
teachers’ entry into and progression within the
profession, and what management systems are
likely to be effective in a decentralized context?
A Policy Reform Agenda
The following set of policy recommendations
emerged mainly from the meetings held by the
team that undertook this education sector review
with many stakeholders, including officials in
the central agencies, provincial and district
officials, teachers, head teachers, members of
school committees (including some parents),
national education experts, and the staff of aid
agencies. They are informed also by analyses of
enrollment, school supplies and public
expenditures data in Indonesia, and by the
lessons from experience of other countries that
have decentralized their education system.
Assign functions clearly and efficiently
within the education system and align them
with appropriate governance and
management structures and financing
arrangements at all levels.
The assignment of governance, managerial, and
financing functions in the education sector
remain vague. Similar functions and roles have
been given to different levels of government,
which is a recipe for replication, conflict, and
chaos. Also, functions and structures are not
aligned (for example, the central Ministry of
National Education is still quite large despite the
transfer of many of its responsibilities to lower
levels of government) and financing
arrangements do not conform to functions (as
illustrated by the many different sources of
financing for capital expenditures at the local
level). Moreover, some devolved functions are
best left to the national or provincial levels, such
as coordinating the strategic direction of the
education system and setting education
standards. Resolving these issues will require
reviewing and revising the decentralization laws
to clarify the assignment of functions, to correct
the misalignments between functions and
structures and between functions and financing
arrangements, and to follow through with
corresponding structural changes.
Reform the central Ministry of Education
so that it can articulate and harmonize
education policies and design an
implementation program, and an
investment and funding plan for those
policies, while ensuring that local
governments and civil society have a voice
in this process.
The MoNE should be reorganized according to
its new major functions consistent with its
oversight role in a decentralized education
system. In particular, the Ministry should:
x Harmonize and link new education
policies and programs for example,
xii
standard setting, teacher certification,
and school rehabilitation and repair, and
retire any leftover policies and programs
that undermine the goals under
decentralization.
x Develop, test, and disseminate new
management and operations systems in
three areas—gathering and reporting
information, budget and expenditure
tracking, and planning, monitoring, and
evaluation of performance—at all levels
of government and at the school level.
x Foster a national education information
system consistent with decentralization
with financial incentives offered to
districts for reporting information to this
national-level education database.
x Develop management and technical
capacities at all levels and define
performance standards and measures for
all decentralized functions and a
corresponding checklist of basic
competencies needed to carry them out.
Increase the resources that are available to
the district governments for education.
To implement their assigned functions under
decentralization, local governments should
manage far more educational resources than just
teacher salaries. Only a very small proportion of
the transfers to these governments is available
for non-salary expenditures. The result is either
that schools are starved of much-needed capital
investments or that capital investments in
schools are financed in a fragmented and
unplanned way by the central government or aid
agencies, robbing the districts of the ability to
manage their education systems. To rectify the
situation, the central government should expand
the education allocation through the block
transfer mechanism and should develop and
disclose a multi-year plan for financial, technical
and management assistance to local
governments. These educational assistance
plans should be developed, in consultation with
local governments.
Require provincial and district
governments to prepare and implement
multi-year regional investment and
financing plans as well as a corresponding
assistance plan for each school in
accordance with regional goals and with
school capacities and needs.
Giving transfers to lower levels of governments
is more effective when efforts are also made to
build local planning skills, to increase
transparency in the allocation and use of local
funds, and to require accountability in return for
the transfers. Start by replacing the budgeting
process that local governments and schools go
through each year and replace it with a multi-
year investment plan and an annual spending
plan. In doing so, a clear funding mechanism is
also needed to transfer resources to schools that
is easy to implement and to monitor. Districts
should disclose publicly how much they will be
giving to each school well before the beginning
of the school year. A periodic financial audit of
schools is an input into the preparation of the
schools’ multi-year assistance plans and makes
the implementation of these plans easier. These
are concrete actions that provincial and district
governments can take together.
Help all schools to make and implement
decisions that will improve quality,
especially those in poor areas.
But more resources to schools are not sufficient
to improve them. Making schools the center of
a strategy that is performance based is. The first
step in improving school quality is to bring the
physical and human infrastructure up to
minimum standards for accreditation and to
ensure that schools are funded at least to the
minimum necessary for operations and
maintenance. This should be accompanied by a
periodic audit of schools on the basis of a
checklist of standards, require schools to report
their own expenditures in a timely fashion,
establish a proposal-based grants program that
would allow schools to request extra resources
for specific innovations and experiments, and
develop a policy for targeting special assistance
to those schools that do not meet the minimum
xiii
quality standards, especially in poor areas. In
line with this, the central government should
adopt pro-poor education programs to stimulate
demand consistent with the goals of the global
Education for All initiative, and provide
adequate and timely technical assistance to local
governments to build the capacity of local
governments to carry out their new
responsibilities effectively. As for the central
government, the Indonesian government should
adopt a “one policy roof” for all schools, and, as
a first step, assess all religious and private
schools according to the same national minimum
education quality standards that apply to public
schools.
Establish a teaching service, separate from
the civil service, that includes a
transparent, system-wide appointment and
deployment process and a professional
development system that is school-based
and performance-led.
Our most critical recommendation is for the
establishment of a separate teaching service that
involves: merit-based appointments, transfers,
and promotions; school-based performance
evaluations; and professional development that
covers all phases of the teachers’ career
including their initial training, their induction
into the teaching profession, school life, and
continuous professional development. This
service would need to be built up over time.
Implementing the Policy Agenda
Finally, there is the question of how best to
implement these recommended actions. Both
supply-side and demand-side approaches will be
needed to fill existing policy and technical gaps.
Supply-side investments are needed to
strengthen the capacity of central education
agencies to make policy, to plan, to set
standards, and to measure the performance of
districts and schools. They are also needed to
stimulate the development of new solutions that
can be used by local governments. It is vital to
link all of the different supply-side investments
in one institution-building agenda instead of
undertaking them separately with no
coordination.
However, in the spirit of decentralization and in
recognition of the great diversity that exists
across Indonesia, demand-side programs are also
needed. First, the central government must
expand its use of block transfers to regional
governments, rather than move away from them,
as the channel for education resources, while
investing urgently in enhancing local capacities
to manage there resources well. Second, the
national government should establish grants
targeted to the poorest districts to fund projects
initiated by local schools and communities. To
encourage districts to collaborate to take
advantage of economies of scale, the grants
program could award more money to those
proposals that are submitted by associations of
districts. Third, as a managerial safety net, the
government should evaluate and support the
education management systems being developed
and used in different regions.
There is also a need to examine both past and
ongoing pilot initiatives in education - to build a
body of evidence-based, analytical lessons about
how to deliver education services of good
quality in the new decentralized education
system. An integral part of this evaluation effort
must be to establish a mechanism to ensure that
these lessons are widely publicized so that they
can be taken into account in national and local
policymaking and school-based management.
xiv
Conclusion
Many messages have emerged from the review,
but the two overarching messages are:
x Improving education quality across the
system is the key educational challenge
for Indonesia today, and even concerns
about equity and serving the poor must
be couched in terms of universal access
to education of acceptable quality.
x Decentralization can potentially help to
meet this quality challenge—by
spreading the governance and
managerial responsibility for improving
better education across different
stakeholders, by strengthening
accountability mechanisms, and by
enhancing incentives to innovate.
However, any delays in clarifying and
rationalizing functions, structures, and
financing throughout the education
system and any lack of commitment
from the government to confronting
some difficult implementation issues
could erode the effectiveness of the
reform.
 Chapter 1: Indonesia’s Educational Progress and Challenges

Enrollment Expansion
Table 1.1: Rising Education Enrollment Rates at all Levels, 1995-2002
Indonesia’s population of 1995 1997 1998 1999 2000 2002
school-age children is one Gross enrollment rate
of the largest in the
Primary level 107.0 108.0 107.6 108.0 107.7 106.0
world, but a sustained
Junior secondary level 65.7 74.2 73.4 76.1 77.6 79.9
drive to build schools
across the country since Senior secondary level 42.4 46.6 47.4 48.4 50.2 48.2
the 1970s has resulted in Net enrollment rate
more and more of those Primary level 91.5 92.3 92.1 92.6 92.3 92.7
children attending school
Junior secondary level 51.0 57.8 57.1 59.2 60.3 61.7
every year. This has been
Senior secondary level 32.6 36.6 37.5 38.5 39.3 38.2
an impressive
accomplishment for the Data sources: Pradhan (2001) and calculations using SUSENAS, 2002
country. The primary
school enrollment rate has grown from 62 and to 80 percent in 2002. In 2002, the net
percent in 1973 to nearly universal coverage enrollment rate was 62 percent. The senior
by 1983 and stayed high even through the secondary enrollment rate has been rising
financial crisis of the late 1990s. In 2002, too, though at a much more modest rate.
the gross primary enrollment rate exceeded These enrollment rates, especially at the
100 percent, and net enrollment rate was 93 primary level, compare favorably with
percent (Table 1.1). The gross enrollment enrollment rates in other countries in East
rate for junior secondary education showed Asia with much higher per capita incomes
more marked increases, rising from 18 (Figure 1.1).
percent in the 1970s to 66 percent in 1995

Figure 1.1: Gross and Net Enrollment Rates in East Asian Countries, 2000

120
100
100
80
80
60
60

40 40

20 20

0 0
Indonesia Philippines Thailand Malaysia Korea Indonesia Philippines Thailand Malaysia Korea
($710) ($1020) ($1980) ($3540) ($9930) ($710) ($1020) ($1980) ($3540) ($9930)
Primary Gross enrollment Primary Net enrollment Secondary Gross enrollment Secondary Net enrollment

Notes: GNP per capita data (in parenthesis) are for 2002
Data sources: UNESCO, 2003 and World Bank Edstats (http://www1.worldbank.org/education/edstats)

1
Education Sector Review
The financial crisis of the late 1990s
threatened to derail the educational progress
that Indonesia had made in the previous
decade. Enrollment rates faltered
immediately after the crisis but have since
recovered. Impressively, large decreases in
enrollment rates were avoided even though
real household education expenditures—and
the share of education expenditures in total
household expenditures—declined by about
one-third from 1998 to 2000 (Pradhan,
2001). Perhaps this is partly attributable to
the national pro-poor scholarship and school
grants program that the government
launched at that time to mitigate the adverse
effects of the crisis (Cameron, 2002 and
Filmer et al, 2001), and perhaps also to a
more established demand for schooling in
Indonesia, even among the poor.
Educational Challenges
There is a widespread perception that
several critical barriers have prevented
Indonesia from achieving its Education for
All (EFA) goals of: (i) enrolling all students
through to the end of junior secondary level,
(ii) ensuring that poorer and disadvantaged
children have full and equal access to
schools that provide an appealing learning
environment and effective instruction, and
(iii) providing education that is of acceptable
quality and is relevant to the economy and
society (PROPENAS, 2000-2004 (Jalal and
Musthafa, 2001). These challenges are
discussed in this section.
Closing Large Regional Gaps
Behind the impressive increase in
enrollment at the national level, wide
regional differences remain. In a country as
large, spread out, and diverse as Indonesia,
differences among regions are to be
expected. However, extreme differences
mean that some regions have been lagging
for sustained periods and thus need extra
help. In 2002, net enrollment rates in
primary education ranged from 83.5 percent
in the province of Gorontalo to 94.4 percent
2
Volume 1
in Sumatera Utara. At the junior secondary
level, net enrollment rates ranged from 40.9
percent in Nusa Tenggara Timur to 77.2
percent in Jakarta, and at the senior
secondary level, from 24.5 percent in Nusa
Tenggara Timur to 58.4 percent in
Yogyakarta.1
Even larger than this between-province
variation are disparities among districts
within provinces. Only about one-fourth to
one-third of the total inequality in
enrollment rates in primary to senior
secondary education is due to differences
between provinces; the rest of the inequality
is due to differences among the districts
within provinces (Table 1.2). This means
that how education resources are distributed
among districts within each province matters
more than how resources are distributed
among provinces if equality in education
outcomes is to be realized.
Table 1.2: Inequality in Enrollment Rates: Wider Gaps
within than between Provinces, 2002
Source of Junior Senior
inequality Primary secondary secondary
Gross Between
enrollment provinces 30.5 29.2 27.5
rates Within
province 69.5 70.8 72.5
Net Between
enrollment provinces 39.2 35.8 29.9
rates Within
province 60.8 64.2 70.1
Notes: The coefficients of variation for enrollment rates across the
years are small at the primary level (ranging from 4 to 7 percent
for net enrollment rates), as compared with those at the junior
secondary level (22-28 percent) and at the senior secondary level
(41-46 percent).
Data sources: District-level database for ESR, using data from
various years of SUSENAS.
1
These comparisons exclude a few provinces where
the samples tended to be in urban areas. According to
the SUSENAS Work Manual (BPS, 2002), “Because
of the unfavorable security situation, in the following
provinces/regencies SUSENAS 2002 is only
conducted in Banda Aceh (Aceh), Ambon (Maluku),
Ternate (North Maluku), Sorong (West Irian Jaya),
Timica (Central Irian Jaya), and Jayapura (East Irian
Jaya).”
Chapter 1 Indonesia’s Educational Progress and Challenges

Table 1.3: Education Equality at the Primary Level and Increasing Equality at
Higher Levels: Net Enrollment Rates by Income Quintile, 1993-2002
Income Primary Junior secondary Senior secondary
quintile 1993 1997 2002 1993 1997 2002 1993 1997 2002
Poorest 86.7 90.3 91.4 22.6 37.7 45.5 7.0 12.4 17.8
2 90.7 93.0 93.6 37.5 52.2 57.9 15.4 24.4 28.0
3 92.5 93.4 93.8 47.5 60.0 65.1 25.2 34.2 37.9
4 93.3 93.5 93.2 61.3 69.2 72.0 42.3 47.8 49.8
Richest 93.0 92.4 91.4 72.5 75.1 76.9 60.8 60.9 62.0

Q5/Q1 1.07 1.02 1.00 3.21 1.99 1.69 8.68 4.91 3.48
Data source: Calculations based on SUSENAS data, various years. Data exclude East Timor. 2002
exclude most of Aceh and Papua.

was three and a half times that of the poorest

Figure 1.2: Highest Grade Completed by 16-18 year quintile (Table 1.3). While nearly all
olds, by Income Quintile
children enter the early primary grades,
pe rce nt those who belong to the poorest income
100 quintile drop out first, thus completing the
90 richest quintile fewest years of schooling (Figure 1.2).
80 These patterns point to the critical junctions
70
in the school cycle when children from poor
households begin to fall far behind.
60

50 Improving the Quality of Education

second poorest quintile
40

30 There is a common perception that the

20 poorest quintile
10
0 graduates with the consistently high quality
1 2 3 4 5 6 7 8
grade
Data source: SUSENAS, 2002.
Reducing Inequality across Income Groups
Indonesia’s past enrollment expansion
closed the enrollment gap between males
and females and across income groups,
especially at the primary education level, but
striking inequalities remain at the junior
secondary and senior secondary levels. In
2002, the net enrollment rate in junior
secondary school of the richest one-fifth
(quintile) of the population was 69 percent
higher than that of the poorest quintile, and
their senior secondary net enrollment rate
quality of schooling in Indonesia is low and
declining and that decades of rapid
expansion of enrollment have not produced
9 10 11 12
of knowledge and skills needed to build a
strong society and competitive economy.
National newspapers periodically comment
on the gap between what schools offer and
the desires of parents for their children to be
taught moral and religious rectitude, the
needs of civil society for an engaged
electorate, and the demands of the enterprise
sector for employees and entrepreneurs with
imagination and problem-solving skills.
According to the results of the 2002
examinations published on the National
Examination Center website, the more than
2.2 million students from nearly 20,000
schools who took the tests averaged scores
of 5.79 for math, 5.11 for Bahasa Indonesia,
and 5.29 for English, out of a possible 10
points for each subject area. These confirm
another piece of evidence—that eighth-

3
Education Sector Review
graders in Indonesia performed well below
most of its Asian neighbors on international
tests in 1999 (Table 1.4). However, this is
just the tip of the quality problem. National
averages mask wide variation across
provinces and across districts. In urban
areas alone, government expenditures per
school ranged from a minimum of Rp 3,000
to a maximum of Rp 460,000 in 2001
(McMahon, 2003). This staggering
variation defines the starkly different worlds
of students around the archipelago.
Indonesia’s school system is immense and
diverse. In 2001/02, there were 28.9 million
primary school students and 1.4 million
primary school teachers in more than
171,000 primary schools across some 400
districts and municipalities. At the junior
secondary level, in grades 7 through 9, there
were 9.4 million students and about 680,000
teachers in more than 31,000 schools,
including general, religious, public, and
private schools. Raising the quality of
education in a system this large is not an
easy task. Underlying the quality problem is
the failure to provide students with the
rudiments of instruction—textbooks, a
blackboard, writing supplies, and a teacher
who has mastered the curriculum and
regularly comes to class. One in six schools
in Central Java and at least one in two
schools in Nusa Tenggara Timur are
reported to be in “bad condition,” according
to school survey data from the Ministry of
National Education (MoNE).
The kind of education system that has
succeeded in expanding enrollment rates is
not necessarily the same kind of system that
can effectively address the kinds of
challenges related to quality. To find
solutions, it is necessary to understand the
problem across all of the regions of the
country and across all of its demographic
groups and to examine the factors that
explain it. A December 2003 article in The
Economist emphasized that Indonesia cannot
afford to ignore the challenge of improving
education quality:
4
Volume 1
Table 1.4: Student Performance on
Mathematics and Science Tests, Ranking
among 38 Countries
Country Mathematics Science score
score & rank & rank
Singapore 604 (1) 568 (2)
Korea 587 (2) 549 (5)
Taiwan 585 (3) 569 (1)
Hong Kong 582 (4) 530 (15)
Japan 579 (5) 550 (4)
Malaysia 519 (16) 492 (22)
Thailand 467 (27) 482 (24)
Indonesia 403 (34) 435 (32)
Philippines 348 (36) 345 (36)
Data source: Trends in International Mathematics
and Science Study, 1999.
“If the priorities of South-East Asia’s
politicians are anything to judge by, few
subjects are more important than
education. … No wonder. Before the
crash of 1997, education was said to be
propelling South-East Asia’s breakneck
growth. Now it is billed as the factor
that could fuel another boom. In fact, the
region’s erstwhile tigers still scratch
above their weight in educational terms.
… But South-East Asian leaders are
terrified that their countries will lose out
on foreign investment and economic
growth unless they produce more skilled
workers” (Economist.com, 2003).
Decentralization: Promise or Peril for
Education?
Indonesia’s decision to decentralize its
government was driven primarily by
political considerations—a national call for
democracy, the end of the Soeharto regime,
and the failures of the highly centralistic
government, intensified by the financial
crisis of 1997. Its decentralization laws
(Law 22 and Law 25 of 1999) are based on
the principles of democracy, community
participation, equity and justice, recognition
of the potential and diversity among regions,
and the need to strengthen local governance.
This reform is also transforming the nature
and level of public service delivery,
including education. How decentralization
applies to the education system has been
defined in Education Law 20/2003.
Chapter 1
According to this law, the principal
responsibilities, authority, and resources for
the delivery of education are transferred to
lower levels of government, while some
decisionmaking power is transferred to
schools themselves.
Can this reform cure what ails Indonesia’s
education system and help to stimulate
educational development? If
decentralization changes the distribution of
accountability among the different
stakeholders in the education system and
focuses that accountability on measurable
educational outcomes, then the answer is
yes. By distributing responsibility and
power more widely throughout the
education sector, decentralization has the
potential to increase the efficiency of the
system and its responsiveness to the needs
of its constituencies. It also gives the
freedom to innovate. In a large country like
Indonesia, local conditions vary widely
enough to make it rewarding and even
necessary to experiment, and locally
generated innovations can stimulate
continuing improvements in education if a
region can learn from the experiments
carried out in other regions.
However, decentralization also raises
difficult issues. Despite its promising
aspects, it is not a policy panacea. Conflicts
and inefficiencies can sometimes arise when
the goals of the different levels of
governments contradict each other. For
example, the central government may want
to allocate public funds in such a way as to
equalize education indicators across the
country, which might be resisted by a
wealthy district that already has achieved a
high education quality level. How to resolve
such disparate education goals among
stakeholders in the sector is a permanent
challenge under decentralization. And even
when everyone’s goals are aligned,
paternalistic behavior left over from decades
of centralistic policymaking, on the one
hand, and the extreme dependency of some
areas, on the other, can be hard to change
simply by edict. There will inevitably be
5
Indonesia’s Educational Progress and Challenges
lags and variations in implementing
decentralization across the country. Thus,
the process of reform is likely to be a slow
one, punctuated by bursts of progress and
frequent setbacks that may lead to rising
frustration and growing mistrust among
stakeholders if they do not understand that
these are inherent aspects of the reform
process.
For decentralization’s promise to be realized
in Indonesia, government commitment to the
reform is necessary but not sufficient in
itself. Four key conditions have to be met:
(i) a clear the division of responsibilities and
power among the different levels of
government, (ii) real decisionmaking power
and autonomy to local governments, (iii)
greater voice of teachers and parents on how
schools operate, and (iv) effective
accountability mechanisms and adequate
financial and technical resources that are
consistent with educational goals. Table 1.5
lists the supporting conditions that have
helped other countries to implement
decentralization and indicates whether the
conditions are present in Indonesia.2 Like
other countries that have decentralized their
education system, Indonesia faces many
implementation challenges. However, most
of these challenges really stem from two
fundamental problems—unclear,
incomplete, and inappropriate assignment of
governance and management functions and
a pervasive lack of the management and
technical skills needed to operate a
decentralized education system.
Topics for this Review
Numerous questions about decentralization
have emerged with its implementation. This
review focuses on four broad issues, which
are discussed in this section.
2
The information is derived from a series of
interviews conducted for this report with various
policymakers, experts on governance and management
issues, and representatives from education boards and
school committees.
Education Sector Review
Governance and Management
Will the shift in authority, responsibilities,
and resources from the central level to
district governments and communities help
to achieve the desired education outcomes in
Indonesia? This depends on how certain
design and implementation issues regarding
governance and management systems are
resolved. These include how the
relationships between district governments
and service providers (district and school-
level providers) have changed; what are the
functions and roles of the large number of
decisionmaking bodies in the sector;
whether local government officials and
school staff have the capacity and skills to
fulfill their devolved functions and
responsibilities; and whether the central
agencies are ready and able to restructure
and reequip themselves to undertake their
new roles.
Finance and Public Spending
Decentralization has shifted the flow and
allocation of fiscal resources from the
central government to the district
governments and from the district
governments to the schools. While
Indonesia is no stranger to transfer
mechanisms, such as its current block grant
system to districts, it has now become one of
the most decentralized countries in the
world. Are the fiscal resources for
education sufficient? Are these resources
being used more efficiently and more
equitably than before? How can the use of
resources be improved? What are the
implications of the new fiscal arrangements
at the school level and thus on educational
outcomes?
6
Volume 1
Education Quality
Improving the quality of the education
provided in schools has emerged as a high
priority in the government’s policy and
issues papers. It has focused on how to
provide more and better inputs such as
textbooks and teaching aids to schools.
Under decentralization, however, improving
quality will mean identifying those
institutional arrangements (such as
standards, structures, and incentives) that
will improve performance and
accountability. What then are the best ways
to raise quality in the context of local
autonomy? How can performance standards
be set, measured, and monitored throughout
the education system?
Teacher Management
In Indonesia, as elsewhere, teachers are a
critical element in the process of educational
development. No systems for managing the
teaching force have been fully specified in
either the general decentralization laws or in
the new Education Law. Yet such systems
are vital for managing the employment,
deployment, and career opportunities of this
very large workforce and to ensure that
schools reach a level of performance that is
consistent with the country’s education
goals. How will decentralization affect the
incentives faced by teachers, how will it
determine teachers’ entry into and
progression within the profession, and what
management systems are likely to be
effective in a decentralized context?
Chapter 1 Indonesia’s Educational Progress and Challenges

Table 1.5: Some Challenges and Issues in Implementing Decentralization in Education

Common challenges in Present in Indonesia?
implementing decentralization*
1 Clear and efficient definition and No. Key features and elements of the new institutional arrangements
assignment of roles and responsibilities under decentralization remain unfinished, ambiguous, and controversial.
(function assignment) The law has specified the obligatory sectors for district governments, but
their functions within those sectors have yet to be decided. There are
inconsistent regulations that affect accountability and mismatches
between the functions of and resources available to the different
government levels.
2 Alignment of responsibility and authority Not yet; function assignment is not clear, even in the new Education Law.
3 State or provincial governments sharing No. Provinces do not have overall power relative to districts and schools.
authority with lower levels of
government and with schools
4 Effective management systems and skills No, though highly variable. Many districts do not have the skills to
(generic and system-based) to implement implement education decentralization, though some do. There is no
the reform serious (universal) diagnostic against a complete and detailed function
assignment, partly because function assignments are not clear. Some
samples have been done. Some districts are so small that they may never
have the skills.
5 Community, parent, and private sector Pilot projects suggest interest is high, but few opportunities exist for
participation participation.
6 Organizational and individual No clear mechanisms but there is a proposal for obligatory functions.
accountability
7 Information of high quality and No. Information infrastructure has to be rebuilt and needs to be linked to
information about quality performance.
8 Effective technical support and guidance No. Most instructions and guidelines and the regulatory tradition are
aimed at control rather than support.
9 Equitable educational access, No. There are large variations across districts and schools in indicators of
opportunities, and quality school quality.
10 Efficient and equitable resource No. Funding formulae are inefficient. Spending per student varies
allocation greatly among districts and among schools.
11 Support for decentralization and political Not a serious problem at local levels. Districts are interested in their new
and legal support powers. School-level decentralization has not yet been tested sufficiently
to assess degree of resistance. Some resistance at national level to
decentralization of certain functions, e.g., those related to teacher
management.
12 Project design supports decentralization Does not appear to be a problem. There were decentralization pilot
objectives projects ahead of the legislation and regulation, but there have been
problems in applying lessons from pilot projects to legislation and
regulation.
13 Institutional and political predictability Appears to be a problem; policy vacillates and implementation sometimes
contradicts policy.
14 Form and process of resolving disputes or No.
contested roles and responsibilities
Notes: *As captured by the knowledge management tools at:
http://www1.worldbank.org/education/globaleducationreform/06.GovernanceReform/governace_ref.htm.

7
Education Sector Review Volume 1

8
 Chapter 2: Governance and Management
Legal Framework and Governance
Structures
Laws 22/1999 and 25/1999, as well as the
newly ratified Education Law 20/2003, have
firmly established decentralization in
Indonesia, but many important legal and
implementation issues remain unresolved.
The Education Law, which takes
decentralization a step further from the
district to the school level and which was the
subject of national debate, clarifies but does
not resolve all these issues. For example,
conflicts may arise from the fact that the
central government continues to be in charge
of setting pay rates for civil servants,
including teachers, even while district
governments have been given the
responsibility for hiring and paying teachers
in all public schools except madrasahs. In
fact, many districts use their legal
prerogative to provide supplementary
benefits and incentives to the teachers within
their jurisdictions. Also, while initial
teacher training remains the function of
those universities that are accredited by the
MoNE’s Directorate General of Higher
Education, it is not clear who is responsible
for teachers’ continuing professional
development.
Some functions may have been
decentralized too far, leaving district
governments to wrestle with very difficult
managerial and technical tasks that they are
unprepared for. It is possible for districts to
collaborate with each other and some are
creatively doing precisely that, but there are
hardly any guidelines, principles, or good
practice examples to inform this type of
collaboration. These conditions have caused
anxiety among education managers at the
local level, as the MoNE recognized in a
planning document in 2003:
9
“[there have been] apathies and
confusion in the process of
decentralization and autonomy in
education as it restructures the ways of
thinking, especially in issues related to
school and community based
management, dichotomy between public
and private schools… and education
management and coordination.” (MoNE,
2003, p.29).
Basic Challenges in Governance and
Management
Education systems have many different
decisionmakers, actors, and stakeholders.
For decentralization to contribute to
educational development, it must transform
the relationships among these various
individuals and agencies. In Indonesia, this
means redefining the roles of the MoNE and
local governments; increasing transparency
and accountability at the local level from
principals and teachers to parents and
community and from the kepala dinas to the
DPRD and the education board; opening up
information flows among parents, students,
and school personnel; and ensuring that
local input is taken into account in the
learning process. In principle, these changes
in relationships should be facilitated by
corresponding shifts in the system’s
organizational structure.
Figure 2.1 reflects what is taking place in
Indonesia. In the figure, the governance or
representative line of accountability is
shown as separate from the management or
executive line of accountability. It also
shows that provincial governments are
essentially missing from the new functional
structure of basic education.
Education Sector Review Volume 1
Figure 2.1: Flows of Governance and Managerial Accountability in Decentralized Indonesia

Governance or Management
Representative Aspect of or Executive Aspect of
Government: Government:
Governance Accountability Management Accountability

President of the
MPR Republic

DPR

MoHA MoF

Depdiknas National
Level
standard-setting report on
(sets standards of reporting organization of
on financial and educational issues) regional government
(accountability is around standards) through MoHA,
reporting to standards

(Provincial Level)

DPRD reporting to standards Regents, Mayors

(Regional People's (Bupati, Walikota)
Representative Kabupaten/
Assembly) Kota
reporting to standards
Education Level
Boards/Councils Head of District
Education Service
(Kepala Dinas
Pendidikan)

reporting to standards

School
Committees Principals
reporting to standards School
Level

Clarifying Governance Functions policies, and regulations that are

There are several unexamined or unresolved
issues relating specifically to the governance
line. Here we highlight a few.
x To make well-informed decisions,
governance bodies at each level (in
other words, the DPR at the central
level, the DPRDs at the district level,
and the school committees at the school
level) need regular access to timely and
accurate information and to the results
of technical analyses. Currently,
however, the governance bodies do not
have any systematic mechanisms for
evaluating the soundness of legislation,
independent of the executive or
management line. This could be
achieved if local legislatures were to
provide research and analysis assistance
to governance bodies, perhaps through
consulting services.
x The role of the district education boards
needs to be revisited. These boards
consist of district leaders, including the
district head, and are supposed to assist
the DPRDs in making policy decisions
about education. However, the divisions
of labor between these boards and the
DPRDs, between these boards and the

10
Chapter 2
kepala dinas, and between these boards
and the school committees do not appear
to be effective.
x As defined by ministerial decree
(KepMen 044/U/2002) and the
Education Law, the duties and powers of
the school committee need to be made
clearer and more efficient. In the case
of financial management, should school
committees have oversight over all
financial matters rather than just the
issues related to funds raised by parents?
Many of the duties of school committees
appear to require them to enter into
contracts, but do they have the legal
right to do so, and if so, how will this
legal status be supported? It would be
very inefficient if each of over 400
district governments had to resolve these
issues on its own.
x At the moment, many functions have
been decentralized too far, that is, down
to a level that does not have the capacity
to perform that function effectively.
Having recognized this, some districts
and provinces are coming together to
form agencies that can handle certain of
their functions on a collective basis (as
suggested in Law 22/1999). For
example, various districts in East Java
are collaborating on the development of
student tests; each district develops the
exam for one academic subject and then
all of the exams are shared across
districts, thereby taking advantage of
economies of scale. Apart from this,
there are other tasks that are most
usefully undertaken in collaboration—
but how should collaboration
agreements be developed?
Rebuilding Management Systems
It is clear that the systems that are currently
in place at the lower levels of government
are not sufficient to perform the many
functions that have been devolved to them.
Nor do the staff at these levels have the
necessary skills to carry out those new and
11
Governance and Management
expanded roles. Management systems at all
levels of government that used to operate the
education system have broken down or are
now obsolete. New systems that will allow
local governments to perform the functions
that have been transferred to them under the
decentralization reform are just beginning to
emerge, but there is no national strategy for
encouraging or disseminating good
practices. There is also some concern that
staff at the local levels are not sufficiently
trained and experienced to carry out their
new and expanded roles. Moreover, field
visits conducted for this review revealed that
there is a great deal of confusion
surrounding the functions related to, for
example, teacher management (including
training, recruitment, deployment,
performance evaluation, human resources
databases, payroll, and redeployment) or to
the allocation of resources to schools. We
highlight a few issues here.
x The MoNE stopped receiving regular
information through its past data
collection mechanisms because districts,
now being autonomous, no longer feel
compelled to transmit information
upwards. In 2002, the annual school
census yielded only a 30 percent
response rate from schools as compared
with 80 percent in 2000. As shown in
Box 2.1, this has also been the case in
other countries that have decentralized
their education sectors.
x The experimentation that follows from
the implementation of decentralization
makes it possible to adapt systems to
natural variations in local conditions.
For example, some districts have
experimented with upgrading their
budgeting and finance systems by
setting formulae for district–to–school
funding. One dynamic bupati in Bali
has managed to eliminate certain fees by
consolidating schools and reducing
certain types of expenditure, thus
making enough room in the budget to
eliminate school fees and still cover
costs. The lessons from these various
Education Sector Review Volume 1

Box 2.1: Information Systems and Management in Brazil and Spain

In Brazil and Spain, devising good management information systems under decentralization was difficult
and problematic but was possible with effort and partnership between the various levels of government.
Brazil. Until 1995, educational databases in Brazil were outdated and data collection was unsystematic.
Not only was there no up-to-date information available to guide policymaking but there was also no way to
monitor or follow up on policy actions. This caused a huge amount of waste in the use of funds. In the
absence of a standard national system of information and indicators, several states built their own data
gathering and processing systems that were not compatible with each other. As a result, Brazil could not
provide international organizations with consistent national data on education, and the available information
was neither sufficient nor reliable enough to be used as a basis for designing policies.
However, in 1995 the federal government issued guidelines for the creation of evaluation mechanisms to
monitor the country’s education system. Since then, the educational information system has been gradually
reformulated and now has an integrated but decentralized structure that meets the country’s monitoring and
evaluation needs. Several factors have contributed to this successful reorganization - the strong leadership
of the Ministry of Education in constant partnership with sub-national authorities and representatives of the
education sector, growing public support for systematic evaluations of schools and other educational
institutions, and multilateral cooperation in building capacity and disseminating the experiences of other
countries.
Spain. As the decentralization process unfolded in the 1980s, the country needed a planning mechanism to
coordinate the educational policies and programs being developed and executed by Ministry of Education
and the decentralized autonomous communities. One example of why such a coordinating mechanism was
necessary was the fact that soon after the decentralization process began the capacity to gather and
reproduce nationwide educational statistics was lost. Various regions had begun gathering their own data in
ways that could not be aggregated at the national level.
The Education Law of 1985 created the Conference of Counselors, with the Minister of Education and the
autonomous community counselors (chief educational officers) of the seven already decentralized regions as
members. Much of the work of the Conference (which meets at least once a year), is carried out by five
technical sub-committees each focusing on a specific issue (such as personnel, the curriculum, or statistics).
The Conference is an instrument of cooperation and not coordination because none of the decentralized
regions is obligated to carry out the decisions of the Conference when they believe their own statutes of
autonomy are being violated. Also, several autonomous communities worry that the Ministry may use the
Conference to control the actions of the decentralized regions. Another problem is that, even though issues
are brought to the Conference as technical problems, the proposed solutions tend to have heavy political
overtones. After all, the Minister and the Counselors sitting around the table are all appointees of particular
political parties, so political agendas are never far from the surface. Nevertheless, at times the Conference is
capable of reaching important agreements and carrying out complex actions.

Sources: Gumaraes de Castro, 2000 and Hanson, 2000.

experiments, however, have not been to the districts, but if a district takes any
systematically documented at the action that would result in changes in
national level or analyzed to see how the payroll database, it must report this
applicable they might be to other action to the national-level personnel
situations. And even in those districts board, which has the power to veto the
that are experimenting, it is not always action. With unresolved issues about
clear if the evolving financial the assignment of functions, it is not
arrangements are ideal or what functions surprising that districts do not yet have
to decentralize to schools and why. adequate teacher management systems.
x At present, responsibility for personnel
x Increased corruption under
management is nominally decentralized
decentralization has been raised as a

12
Chapter 2
concern. The argument is that it is more
difficult to monitor 400 districts than it
is to monitor the central government.
In principle, however, decentralization
has the potential to reduce corruption.
Corruption can be kept under control if
resources are transferred to districts
using transparent allocation formulae,
such as a per student funding allocation,
if all actors know the amount of the
transferred resources and when the
funds are transferred, and if a culture of
public disclosure is engendered at all
levels of government.
Reframing the Role of the MoNE
Many major responsibilities and powers
now rest with district and provincial
governments. However, there are some
important policies and programs that these
governments have no incentive to carry out
because they cannot fully capture the
returns, because they are unable to perform
them well because of a lack of economies of
scale, or because they do not have sufficient
resources to undertake them. For these
reasons, the central government needs to
step in if such policies and programs are to
be undertaken. Such policies and programs
include setting goals for and standards of
service provision, experimenting when
needed, rewarding innovations from other
parts of the system, disseminating
information widely and regularly,
establishing a transparent regulatory
framework and enforcing it, ensuring more
equitable education spending, and
motivating districts and schools to adopt
national education goals.
Because these may be unfamiliar roles to the
central education agencies, they may be
tempted to hold on to their previous roles
rather than to redefine their mission (and
those of their deconcentrated units in the
provinces in the case of the MoNE), to
reorganize themselves accordingly, and to
update their own skills. Evidence from other
countries shows that the central government
has to be politically committed to the
13
Governance and Management
principles of the reform because it must be
willing to assume the costs involved in
changing its role in the management of
education (Box 2.2).
Building Local Capacity
There has not yet been an audit of available
local skills covering all of the likely
functions that would need to be carried out
at the district level under a rationalized
model of decentralization. While districts
clearly must be responsible for raising their
own skills to the level necessary to carry out
their decentralized functions, the national
government is responsible for the
maintenance of standards. Therefore, it
seems appropriate that the central
government should be responsible for
carrying out a nationwide, district-level
audit of current management skills and
standards. At a minimum, the central
government should devise an instrument and
protocol for doing such an audit and for
compiling and communicating the results, as
having each district devise its own protocol
would be wasteful. It may be tempting for
the central government to slow down the
pace of decentralization for fear that district
and provincial governments do not have
sufficient capacity to carry out their newly
assigned responsibilities effectively.
However, there is greater capacity at the
local level than most central government
policymakers assume. Since few real
decisions have had to be made locally
before, the actual extent of capacity and skill
at these levels has not been put to the test.
As decentralization proceeds, it may be that
existing local talents and capacities emerge
naturally, at least in some places. It is clear
that this is already happening in some parts
of Indonesia, as some districts have much
better and more talented bupatis than others.
The same process will undoubtedly occur
when authority is decentralized to the school
level; it will become clear that there are
many principals and community leaders
capable of wielding that authority
effectively.
Education Sector Review Volume 1

This is not to minimize the importance of process known as “asymmetric”

training and capacity building, particularly
on the question of inequality. In fact,
considerable emphasis is being placed on
this aspect in the various planning and
policy documents as noted above. One
possibility is to decentralize authority only
to those schools where capacity already
exists, while continuing to support those
schools that still need to develop it (a
decentralization). However, it is important
not to make the criteria that schools must
meet to be given decentralized powers so
strict that very few can meet them. This has
happened in some countries (for example, in
Colombia’s asymmetric decentralization
down to the district level) but not in others
(for example, South Africa’s asymmetric
decentralization down to the school level).

Box 2.2: Transforming the Current Organizational Structure of the Ministry of National Education
Since the government of Indonesia has not yet arrived at a final and optimal function assignment and since
organizational form should follow function, it is difficult to suggest improvements for the Ministry of
National Education (MoNE) in any detail. However, judging by the organizational structure of the central
agencies of many countries that are decentralized or effective or both, Indonesia’s MoNE is not optimally
organized to provide support and guidance to lower-level government units and to schools.
The national level of modernizing and decentralizing governments, in other words, those that do not
implement policies but guide their implementation by local governments, is characterized by:
x Less focus on traditional line functions such as early childhood, primary, and secondary education
and more focus on “transversal” support functions such as governance improvement, financial
equalization, and quality control.
x Relatively less focus on supporting the direct execution of projects and hence fewer staff devoted
to the inspection and audit functions of these projects.
x More focus on the procurement not so much of goods and construction services but of analytical
and developmental services.
x The separation of those functions that support narrow issues of human resources or budgeting as
they apply to the MoNE itself and to projects run by the national level from those functions that
apply to the country as a whole.
With regard to size, it should be noted that central authorities in many decentralized countries have very
few staff. One extreme in the developed world is Canada, where the national education body functions
with a staff of only a few dozen, since there is no central authority but only a council of provincial
ministers with a very small secretariat. The United States functions with about 5,000 education staff at the
federal level. Developing countries such as China, Argentina, and South Africa have as few as a few
hundred to little over a thousand national-level staff.
The training and capacity of staff matter much more than the number. The dedication of staff time to
functions that have been appropriately assigned to the national ministry is also key. Staff who are highly
capable and whose actions create considerable leverage—because they are focused on overall direction,
policy, measurement, and comparisons—are much more important than the number of staff at the apex of a
decentralized system.
The proportion of the total budget spent by the national level in decentralized countries varies but is
generally higher than the proportion of staff working at the national level. At the pre-tertiary level in
decentralized countries, this ranges all the way from less than 10 percent (in China, the United States,
South Africa, and Hungary) to as high as 20-40 percent (in Australia, Poland, and Spain). As noted above,
the staff working at the national level in decentralized countries have a great deal more leverage over
resources than similar staff in a centralized system or than similar staff at lower levels of government.

14
Box 2.2: Transforming the Current Organizational Structure of the Ministry of National Education
continued
In sum, a central ministry in a decentralized system does not implement policies or interventions. Instead,
its functions should be to:
x Set standards and measures of performance (ideally related to outcomes rather than inputs) and
ensure that the necessary information systems exist to collect and report them, (including and
engage in goal-setting or minimum service standard-setting, again outcome-oriented
x Focus on institutions of delivery (for example, schools or colleges) rather than “levels” (such as
primary or secondary)
x Ensure competition and emulation between decentralized regions
x Ensure that decentralized units can raise their quality up to the necessary standard through systems
development, teacher training, and sufficient funding
x Ensure that functions with large economies of scale are carried out at a level that takes advantage
of those economies of scale, perhaps by brokering associations between districts or provinces
x Use funding or norming to correct spillovers between regions, for example in specialized areas of
education where one institution could serve more than one district
x Defend equity in funding and outcomes by norming funding equity if possible and, if not, by
persuasion
x Make planning, forecasting, and investment priorities for the whole education system, including
forecasting and analyzing teacher supply and demand
x Encourage experimentation and disseminate any lessons learned from those experiments.

Chapter 1 in Volume 2 of this review contains a more considered discussion of these issues and proposes,
for discussion purposes, an organizational structure for the MoNE that might better suit Indonesia’s needs
than the current one.

15
Education Sector Review Volume 1

16
 Chapter 3: Finance and Public Spending

Financing Framework and Structures own-account revenues and shared revenues

under Decentralization for the remaining 30 percent (Table 3.1).3
This significant restructuring of
Decentralization has changed not only the intergovernmental transfers affects what
distribution of authority and responsibilities public resources are available for education
within the education sector but also how and who controls how those resources are
fiscal resources are generated and allocated. spent.
Prior to decentralization, the central
government transferred public funds to the In principle, the DAU allocation is based on
regional governments through the a formula that takes into account differences
Autonomous Government Subsidy (Subsidi in the needs and means of provinces and
Daerah Otonom or SDO) and through districts; in practice, however, the central
Presidential Instruction grants (Instruksi government simply guarantees that a
Presiden or INPRES). Now, province or district will receive an allocation
intergovernmental transfer arrangements at least equal to the amount it received in the
largely consist of block grants given by the past and that will cover its past wage
central government to district governments, obligations. As long as a large part of the
supplemented by an expansion of the block grants are protected under the “hold
districts’ share of the revenues generated harmless”4 components, regional
from local economic activity and natural governments will have little control over the
resources. The new transfer system is a transfers that they receive, nor will they
combination of two grant channels—the have a strong incentive to spend those
General Purpose Fund (Dana Alokasi Umum resources efficiently. This is particularly
or DAU) and the Specific Purpose Fund true in the education sector where the
(Dana Alokasi Khusus or DAK)—and salaries of the teaching force account for
more than 90 percent of expenditures,
Table 3.1: Sources of Local Revenues, Fiscal Year leaving districts only a small fraction of
2001 their budgets to allocate.
Source Rupiah Percent
(Billions) Law 34/2000 has given taxing authority to
Carry-over from previous year 2,157 2.7 district governments. Districts, but not
Own-source revenues 5,233 6.6 provinces, are now allowed to generate their
Transfers from central 69,280 87.2
government
own taxes provided that the taxes are
Of which the DAU allocation 54,401 68.5 authorized by the national government and
Other revenues 2,783 3.5 that they are in accordance with the
Total revenues 79,453 100.0 principles set out in Law 34/2000.5 Since
Source: Ministry of Finance

various revenue-sharing mechanisms. On
average, the DAU transfers account for
about 70 percent of the total revenues of
provincial and district governments, and
3
These new financial structures are described in
greater detail in various studies, including Hofman,
Kaiser, and Goga (2003) and Lewis (2001, 2002, and
2003).
4
This is to say that the central government is not
responsible if all of the block grant funding does not
reach the regional governments.
5
This is not a new phenomenon, however. Law
18/1997, the previous law on local taxes and levies,
was intended to stop the practice that then prevailed in

17
Education Sector Review
being given this authority, district
governments have been creating new taxes
aggressively (Lewis, 2002).6 In reality,
district governments have limited capacity
to raise taxes from their own resources such
as land, buildings, and natural resources, so
these constitute only about 5 percent of their
revenues. Provincial governments have a
larger own-resource base but must share this
with district governments. Moreover, the
revenue bases of provinces and districts are
highly unequal. For example, the per capita
non-oil and gas GDP of DKI Jakarta is
almost nine times larger than that of the
poorest province, East Nusa Tenggara
(Akita and Alisjahbana, 2002); in 2002, the
richest local government had 32 times the
revenues per capita of the poorest one
(World Bank, 2003b).
To supplement local financial resources,
district governments are allowed to borrow,
but are limited in the extent to which they
can go into debt. They must get the
approval from the Ministry of Finance in the
case of foreign loans and none of their loans
can be guaranteed by the central
government. Law 25/1999 prevents local
governments from borrowing except for
projects that will generate a financial return,
although this clause has been loosened up by
the implementing regulations. At the
national level, about half of the development
budget (DIP) continues to consist of donor
project loans, and the central government
currently bears the debt-servicing burden on
local government of creating a plethora of local
government taxes. Many of these taxes had little
revenue potential but imposed high costs on the
taxpayer and the economy. Law 18 restricted regional
taxes to a specified list and made any additional taxes
conditional upon the approval of the Ministry of Home
Affairs with advice from the Ministry of Finance.
6
Property taxes are administered and collected mainly
by the national government, although regional
governments assist with collecting these taxes in both
rural and urban areas. Until recently, the national
government retained 10 percent of total tax revenues
for its own use, 9 percent was provided to local tax
offices to assist with collections, 16 percent was given
to provincial governments, and 65 percent to local
governments (Lewis, 2002).
18
Volume 1
these expenditures (Hofman, Kadjatmiko,
and Kaiser, 2002). As district governments
increasingly exercise their right to borrow, it
will be necessary to improve the framework
of on-lending and on-granting mechanisms
that apply to the regions.
Expanding the Resource Envelope for
Education
In the past, Indonesia ranked lowest among
its Asian neighbors in the share of GDP that
is spent on education; in the late 1990s,
Indonesia spent just 1.4 percent of its GDP
on education compared with 4.7 percent in
Thailand and 4.6 percent in Malaysia. Since
decentralization, the total government
spending for education has increased
considerably. According to SIKD estimates,
education expenditures for primary and
junior secondary education in 2002 were 2.4
percent of Indonesia’s GDP at the district
level, totaling about Rp 43 trillion. This
spending may well have increased close to
the EFA cost implications for 2004,
provided that education spending increased
by the same projected percentage increase in
DAU transfers. (McMahon, 2003). In the
past, Indonesia was able to achieve
impressive progress in its basic education
enrollment rates, which was due in part to
the country’s sustained focus on boosting
primary education enrollments and in part to
the low cost of doing so.7 A greater focus
on education quality requires greater
resources and, more importantly, a more
effective use of those resources.
Some recent legislation has attempted to
secure a greater slice of the country’s
revenue pie for education. The new
Education Law stipulates that a minimum of
20 percent of the central APBN budget,
7
Duflo (2001) examined the effect of the large
number of schools built between 1973-74 and 1978-79
and concluded that each new school constructed per
1000 children resulted in 0.12-0.19 year more
schooling in Indonesia and 1.5-2.7 percent increase in
earnings for the first cohort that benefited fully from
the program. This result implies an economic return
to education of 6.8-10.6 percent.
Chapter 3
exclusive of salary costs, and 20 percent of
the districts’ APBD budgets, also exclusive
of salaries, must be allocated to education.
Including salaries, districts now spend on
average about 40 percent of their APBD
budgets on education. Excluding salaries,
they spend less than 10 percent (assuming
that salaries are a modest 80 percent of
education spending out of APBD resources)
or less than one-half of what is stipulated in
the Education Law. To double the share of
education spending in APBD net of salaries,
districts will need to make significant
reductions in the shares of other sectors,
which may or may not be politically
possible.
Likewise, earmarking 20 percent of the
APBN when the MoNE is supposed to have
devolved most of its functions to local
governments may be well-intentioned but
has disadvantages. It puts pressure on the
MoNE to develop its own spending
programs in the regions, which would mean
that most of the capital investments in
education would be outside the control of
district governments. The experience of
other countries shows that this kind of
earmarking often leads to more spending but
not better outcomes because these centrally
initiated interventions guarantee the
provision of funds regardless of regional
performance and creates multiple
opportunities for corruption. The challenge
then is to ensure that central and local
education budgets are indeed spent on
schools and students, that they cover the
basic operating expenses of schools besides
the costs of teaching and non-teaching staff
and their career development activities
(including instructional supplies, the routine
activities of the school committee, the
maintenance of a school database, the
dissemination of information to parents and
the community, utilities, and light repair of
the school buildings and other maintenance).
Our principal recommendation about
ensuring adequate resources for districts and
schools is for the education system to adopt
a formula-based funding mechanism that is
19
Finance and Public Spending
easy to monitor and to implement, is non-
discretionary, and depends on just a few key
measurable criteria. One important step is to
define minimum learning standards that will
be the basis for an agreed level of funding
per student. The advantages of this type of
funding mechanism are that it makes it
easier for local governments and schools to
plan ahead because they will know precisely
how much funding to expect. It is also more
transparent, which ensure accountability.
One of its disadvantages is that it relies on
the availability of accurate and timely local
enrollment data. If these are not available,
then the allocations to schools and districts
may either fall short of what is needed or
fall prey to corrupt efforts to use bloated
enrollment numbers (Ross and Levaþiü,
1999). This formula for funding should
become the routine way to allocate basic
education resources in Indonesia, and, in the
process, it will facilitate school-based
management by allowing schools to manage
assistance in cash rather than in kind.
Table 3.2: Per Capita Education Spending, 2001-
2002
2001 (Actual) 2002 (Planned)
Total 134,000 175,058
(1,586 – 463,753) (1,193 - 540,479)
Routine 126,118 159,460
(998 - 450,789) (1,013 - 539,287)
Development 16,185 21,692
(177 - 205,044) (402 - 415,463)
Notes: Numbers in parentheses indicate minimum and
maximum values.
Source: SIKD, Ministry of Finance
There has already been an attempt as part of
the Education for All effort to estimate the
per-student level of spending that would be
consistent with attaining universal
enrollment and improving education quality
in Indonesia (McMahon, 2003). What needs
to be done is to open up this proposed
formula to national scrutiny and debate in
order to validate it and to obtain political
support for it. What also needs to happen is
for the funding formula to be applied to the
local processes of allocating the DAU, not
the DAK. Lastly, the funding mechanism
needs to take into account the extreme
Education Sector Review Volume 1

variation in the current per-student
allocation of the routine and development
budgets in the sector. Clearly, those districts
that are at the lower end of the range will not
meet any kind of education standard (Table
3.2), so the funding mechanism should be
designed to enable district governments to
mitigate specific inequalities among schools.
For example, the funding formula might
apply only to the per-student level of routine
operational expenditures.
Alternatively, the funding mechanism could
use a per-school rather than per-student
resource formula to deploy teachers and
other staff to schools and to determine
capital investments. Many schools in
Indonesia have urgent development needs,
ranging from staff development to the
Figure 3.1: Indonesia: Education Spending by
construction of a library or science
Level of Government, 2001
laboratory. Richer districts will be able to
undertake these capital investments
themselves, but poorer districts will not, so a
are off-budget and local governments often
have no knowledge of them. In 2003, there
were around 400 different education projects
in operation in Indonesia, but there was little
coordination and information exchange
among them. During field visits for this
report, regional education officials in
Yogyakarta and Central Java expressed
frustration at not knowing the full extent of
the resources (in kind) available to them.
Without information and without
transparency, it is very difficult for local
governments and schools to plan ahead, to
develop coherent and effective educational
programs, and to monitor and assess the
flow of funds through the system. Another
significant advantage of using the DAK
Central
LG Capital Recurrent

pro-poor investment program will be Expenditures Expenditures

(APBN)
(APBD)
needed. In fact, because poorer districts 6% 12%
Central Capital
repeatedly find themselves unable to fulfill Expenditures
(APBN) 18%
their responsibility to deliver education of
acceptable coverage or quality (as is evident Province
from the strikingly wide range in the per Recurrent
Expenditures
capita level of education expenditures across Recurrent
(APBD) 1%

districts), in the short-run, direct assistance penditures

(APBD)
to schools in the form of cash would be
needed even to cover their basic operational
costs, perhaps through a special DAK
allocation.
Significant capital investments for education
can also be made through the DAK
allocation. If there are key areas of
investments that are clearly called for by the
national education program, the MoNE
could consider setting aside a special DAK
allocation for those capital expenditures and
inviting local governments to submit
proposals for receiving a share of that
allocation. The advantages of using the
DAK allocation instead of the MoNE’s
development budget (DIP) is that local
governments can incorporate their DAK
grants into their overall planning and
budgeting processes, whereas DIP initiatives
Province Capital
60% Expenditures
(APBD)
3%
Source: APBN and APBD data
Notes: LG=Local government
allocation and minimizing DIP initiatives is
that, by increasing the transparency of the
distribution of development or capital funds
across regions, this would make it
considerably easier to use the DAU transfers
to increase equity among regions.
Making Education Expenditures
Count
Under decentralization, the impact of
education spending on education goals will
depend on how fiscal resources are spent at

20
Chapter 3
the central and local levels, on whether those
resources reach the schools, and, within the
schools, on how those resources are used.
Certain key actions can increase the
efficiency of these education resources.
Spend Locally
There are three important ways to make
expenditures more effective. The first way
is to change the pattern of spending on
education, especially by district
governments. In the system as a whole,
three-quarters of resources are spent on
recurrent items, mostly on salaries and
benefits and a small amount on operational
costs and pedagogical supplies, and one-
quarter is spent on capital outlays (Figure
3.1). This pattern is more extreme at the
district level; in 2002, 95 percent of the
routine budgets of district governments was
spent on the salaries of teachers at the
primary and junior secondary levels and
other personnel.8 Often, even the tiny share
left over for development expenditures,
which is supposed to be devoted to building
new classrooms, repairing school facilities,
and teacher training, is occasionally used to
cover routine expenditures, especially staff
salaries. This expenditure allocation is
going to have to change if education quality
is to improve. Teachers do play the key role
in the teaching process, as will be discussed
in the next two chapters, but adequate
resources need to be devoted not only to
salaries but also to teacher professional
development and classroom supplies.
It is not a good idea for the central
government to step in to fill the capital
expenditure deficits at the local level. The
current system of development projects
designed and controlled by the central
8
Article 49 of the new Education Law states that the
salaries of teachers and personnel appointed by the
central government will be paid out of the national
budget, the APBN. Presumably, the teachers and
personnel whose salaries were transferred to the
districts as part of the decentralization reform will
continue to be paid under the local budgets, the
APBD.
21
Finance and Public Spending
government was successful in expanding
enrollment, but has not been effective in
raising the quality of education to a
minimum acceptable standard. The
financing issue that most affects the quality
of education (the topic of the next chapter) is
whether budgets for schools are sufficient to
cover schools’ basic operation costs, let
alone to support their efforts to improve
quality. Many junior and senior secondary
schools now receive 50 percent or less than
their pre-decentralization budgets
(McMahon, 2003).9 Therefore it is important
to ensure that resources find their way to
schools and do not get appropriated –
whether legally or through corruption – by
the district governments.
Differentiate Assistance to Districts and
Schools
When allocating DAK or DIP funds across
districts, it is crucial to differentiate among
districts based on their resources and needs.
Provided that reliable data on districts and
schools are available, the national
government should be able to develop an
assistance program to local governments
that is based on three indices: (i) an index
that characterizes educational progress in all
of the 400-plus districts, (ii) a financial
needs index, and (iii) an education
management capacity index that measures
the effectiveness of each district’s
performance assessment, information
system, and financial processes. All districts
can be ranked in a three-dimensional grid
defined by these indexes and grouped into
discrete categories that would correspond to
different packages of assistance from the
central government.
For example, those districts with the worst
education index and the poorest financial
and management capacities would qualify
for the highest level of investment and
9
Districts with high levels of local revenue and
districts that are required to maintain particular levels
of funding to qualify for project funds have
maintained or increased their level of financing for
schools.
Education Sector Review Volume 1

test scores. Those

Figure 3.2: Relationship between Two Dimensions of Educational districts that appear in the
Development upper right-hand quadrant
are those that performed
Plot of individual districts by their average test scores and gross the best in both respects
enrollment rate, with the effect of household incomes on test scores and
(enrollment rate and test
enrollment rates netted out
scores), given their
Residual total score variation Linear trendline income levels, while
4 those that appear in the
lower left-hand quadrant
12
11
11 are those that performed
2 3 13 11 11
13
13 the worst.10 Needless to
Residual total score variation

22 11 12 11 11 1312
20 11 12
20 20 11 201117 1333 10
29 17
11
13
11
11 13
13
1113
22
say, those in the upper
2013 12201111 10 1313 311113 1341311
10 10
11
10
20411
11 20
29
13
20
11 11 111311
22
11
16
11
10
10
221123 11
3 13
22
20
2213
17320
13 10
13
273
13
135 right-hand quadrant
13 20 13 13 1013 19 22 113 13 1114 16813 2213
2029131620 13 1917 518 1020
13
419 20
17 11 28 18 20
17213
18 618
4
0 13 13 20
10
203010 16 20
20
31616 10
6 14 19 4
19
19
22
17 10
3
10
17
34
20 10 20 10 4
3162415 302 13 2
4 10 should not be receiving
14 17 14
1610
52 1017416
2015 5 17
1555516
28 24 28
619 4 22224
30
28 24 15 24 24 14
16
191514
27 614
1424 24 62885838 828108248223
2 6 222 5218 2 the kind and level of
24 5
28 24 23 14 21 27
assistance that those in
23 21 21
-2 24
24
23 21 the lower left-hand
17 24 21
2424 quadrant should be. The
24 23
23 chart also shows that, in
-4 6 general, districts that do
-4 -2 0 2
better or worse in one
Residual gross enrollment variat dimension also do better
Residual variation of total score and gross enrollment or worse in the other.
Data source: 2002 EBTANAS test scores for junior secondary schools averaged by district; However, there are
gross enrollment data by district from SUSENAS 2002.
Note: The codes for the plots refer to the provincial affiliation of each district. districts that do well in
one dimension but not the
other, and the type and
technical assistance program for accelerating level of assistance to them should be
educational development. In exchange for a different also.
high level of financial assistance, these
districts would be required to agree to accept Spend More Resources on Those Most in
a correspondingly high level of technical Need
and managerial assistance from the MoNE.
At the other end of the spectrum, those A common concern about decentralization is
districts with the best education index and that the transfer of authority and
the highest capacities would qualify only for responsibilities to local governments
enough assistance to enhance their weakens the central government’s ability to
educational development but would not be close gaps between the richest and poorest
required to take technical or managerial areas of the country and thus inequalities
assistance in exchange for financial help. grow. Districts with the most resources are
The idea behind the varying level of frequently those with higher enrollment
oversight is that districts prefer to have more
autonomy (less technical and managerial 10
support) than less autonomy (more technical Regression analysis was used to identify the
relationship between education outcomes (that is, test
and managerial support), so this acts as an scores or enrollment rates) and the districts’ average
additional incentive for better performance. household income levels. The regression results were
To illustrate, Figure 3.2 portrays the then used to obtain “residual” test scores and
distribution of districts according to two “residual” enrollment rates that could be attributed to
differences in the education systems and other factors
dimensions of educational development –
and not to differences in the economic status of the
school enrollment rates and average student district.

22
Chapter 3
rates and better schools, whereas districts
with fewest resources are those with lower
education indicators. The current formula
for the DAU allocations includes poverty as
one of its criteria (albeit affecting only a
small part of the allocation), but there is no
similar mechanism for ensuring that district
governments themselves use poverty as a
criterion for funding schools. In addition,
the trend towards local governments raising
their own resources may widen the gap
between those districts that have a strong
revenue base and those that are less
prosperous. Currently, districts receive
twice as many resources from
intergovernmental transfers as from their
own revenues, so if transfers are used
equitably, they can be a powerful
mechanism for reducing regional
inequalities.
Do district governments consider the same
factors as the central government does when
allocating their funds? When we examined
what factors appear to influence education
spending by districts, using their level of
per-student education expenditures (from the
2002 APBD allocation), we found that those
districts with greater fiscal capacity make
larger capital investments in education than
those districts with lower fiscal capacity.
Also, poorer districts (with the level of
poverty measured as the proportion of the
population below a certain poverty
threshold) do not spend more on education
from their budgets than richer districts
despite receiving a larger allocation more
from the DAU. Since the households in
poorer districts are less able to spend for
education themselves, both central and local
governments should be willing to
compensate for this deficit in order to reduce
inequality among districts.
To make pro-poor policies and programs
financially sustainable, it is important to
target them to those who need them most.
There are valuable lessons to be learned
from around the world (for example, from
Bangladesh, Brazil, and Mexico) on how
this can be achieved. Indonesia’s own past
23
Finance and Public Spending
experience with its large scholarship and
school grants program, launched at the onset
of the recent financial crisis, can also be an
important input into the design of such a
targeted program.
One estimate of the cost of raising the
education of poor youths is given in the EFA
costing report for Indonesia (McMahon,
2003). The report recommends eliminating
fees. Currently, fees are charged for
entrance; BP3; examinations; procurement
of textbooks, notebooks, and school bags;
transport; and so on. Districts and schools
would have to be able to forego revenues
from these fees while increasing the
enrollment of poor students and without a
worsening of education quality. At the
primary level, eliminating fees would mean
foregone revenues of Rp 13,000 per pupil in
2004 (2003 prices), on average. At the
junior secondary level, foregone revenues
amount to about Rp 57,000 per pupil.
The report also recommends an additional
grant for the poorest 18 percent of students
to cover the opportunity cost of schooling
incurred by their parents and the cost of
teacher salary supplements in their schools.
The report estimates a student grant of Rp
290,000 per pupil per year at the primary
level, which is more than doubling the
current grant by the government, and Rp
93,000 per pupil per year at the junior
secondary level. It would be advisable to
initiate pilot tests of these and alternative
grant amounts in order to ascertain the likely
responses of poor families across different
parts of Indonesia.
Lastly, the central government can influence
the allocation decisions of the better-off
districts, for example, by instituting a reward
system for those districts where the
education indicators of the poorest
communities or schools significantly
improve and, conversely, by taxing those
where indicators become worse.
Education Sector Review
Leverage Governmental Resources – But
Consider Consequences for the Poor
The total resource envelope for education
includes private expenditures as well as
public expenditures. The new Education
Law states that the financing of education is
a responsibility shared by the government
and the community (Articles 9, 47, and 54).
Indeed, students already pay a variety of
school fees, including monthly tuition fees,
entrance fees for new students, term and
final test fees, and extra-curriculum fees,
averaging an estimated Rp 213,000 per pupil
in primary and junior secondary schools
(McMahon, 2003). These fees together
constitute a substantial contribution to the
income of any school. One study found that,
on average, fees consist of about one-third
of schools’ non-salary expenditures, which
usually account for about one-fifth to one-
tenth of a school’s budget (McMahon et al,
2001).11 Schools also receive revenues in the
form of BP3 contributions and other
donations from parents, private foundations,
and NGOs.
Should schools be relying on students and
the local community for resources? There
are opposing views on this. On the one
hand, those schools that receive considerable
financing from the local community tend to
have greater parental involvement, to
operate more efficiently, and to have more
successful educational outcomes (Bray,
1997; Jimenez and Paqueo, 1996; and
James, King, and Suryadi, 1996). People
who pay at least a small amount directly for
education and other school services come to
value those services more highly than when
they receive those services for free. On the
other hand, if schools yield benefits to
11
A similar situation prevailed a decade ago when
public schools obtained 92 percent of their total
funding (both salary and non-salary) from government
allocations. However, there was considerable
variation among regions. In Jakarta, public schools
depended on government resources for only 70
percent of their total budget, while in other parts of the
country, public schools depended on the government
for more than 90 percent of their budgets (James,
King, and Suryadi, 1996 and King, 1997).
24
Volume 1
society that exceed the benefits that they
yield to individuals, there is good reason for
society to subsidize the provision of basic
education. In addition, if the direct and
indirect costs of education are too high, they
deter poor children from going to school. In
the various sites that were visited for this
study, most schools seem to have granted
exemptions to those who could not afford
the fees, even in cases where the fees were
quite low, but this is clearly a situation to
watch as practice differs across districts and
across schools.12
Track and Monitor Spending
The importance of establishing an effective
information system has already been
discussed above. Having access to accurate
and timely information helps governments
to plan and manage the system, and sharing
the information with local stakeholders, such
as parents, through periodic reports may put
pressure on district officials themselves to
be more transparent and efficient. The focus
group meetings with teachers, principals,
and district officials undertaken as part of
this review indicate that decentralization,
while mostly a positive change, has created
more opportunities for bribery and corrupt
practices (Vanwel, Musthafa and
Miftahuddin 2003). Bribes in money or kind
are said to be more costly, processes often
take longer than before, and the distribution
of grants, scholarships, and other school
funds is particularly vulnerable to
corruption. Also, school principals
complained that the lack of transparency
about budget allocations at the central and
district levels prevents schools from
predicting how much revenue they will
receive except through fees collected at the
school level and makes it impossible for
12
At the beginning of the financial crisis in 1997, the
MoNE reminded schools that the school admissions
fee had been abolished in government primary schools
in 1984 and that BP3 payments were voluntary.
School revenues decreased in real terms by as much as
one-third because of the drop in the real values of fees
and government subsidies as well as an increase in the
non-payment of fees.
Chapter 3
them to do any multi-year improvement
planning. These problems are exacerbated
by the fact that district governments and
schools receive funding from a number of
different sources, often too many for them to
keep track of, all with different management
arrangements.13 Because of the fragmented
nature of the funding allocations at the
district level in Indonesia, it is almost
impossible for the ultimate beneficiary (the
school or the student) to know how much
funding they are supposed to receive and
whether the funds have been released. In
this situation, standards and information are
very important in increasing transparency
and compliance with policies, regulations,
and laws and in reducing corruption at all
levels of the system.
The experience of countries around the
world shows that better information and
greater disclosure are key to maximizing the
effectiveness of decentralization (Bird and
13
This is not a new phenomenon. It was noted in
World Bank’s report “Education in Indonesia: From
Crisis to Recovery” (World Bank, 1998) that essential
information on the budget is “scattered among five
different ministries,” making the management of the
education system a very difficult task.
25
Finance and Public Spending
Smart, 2002). For Indonesia, this means
requiring local governments to prepare both
an adequate investment plan and an
adequate maintenance plan. Meanwhile, the
central government should provide
technical assistance to help local
governments to develop plans, arrange
financing, and operate the local education
system as efficiently as possible. Also,
financial accounting and reporting processes
should become a standard part of the
operating procedures at all levels of
government and in schools.
At least as much managerial effort needs to
be spent on accounting and reporting
processes as is spent on planning and
budgeting. It is already clear that a program
for building the financial management
capacity of local officials and school
personnel is urgently needed. This capacity
building program also needs to focus on
reporting responsibilities and techniques.
Education Sector Review Volume 1

26
 Chapter 4: Quality Assurance and Improvement
As already mentioned, there is a common
perception that the quality of schooling in
Indonesia is low and declining. In its final
report in 2002, Indonesia’s National
Commission on Education expressed
concern that the education system does not
provide Indonesia’s graduates with the skills
needed to compete successfully in a global
knowledge economy (MoNE, 2002a). It
may help to begin this chapter by defining
education quality, as the term can mean
different things to different people.
Education quality is typically defined in
terms of its instrumental value in increasing
student academic performance. In other
words, quality is usually defined as that mix
of inputs, classroom practices, school
environment, and school organization that
helps students to learn. This definition can
be broadened to include also those inputs
and practices that provide children with safe,
healthy, and pleasant places to learn
regardless of their impact on learning
achievement.
Two Approaches to Improving
Quality
In Indonesia, there have been two
conceptually related policy approaches
towards improving the quality of
education—quality assurance or control and
quality improvement. Both approaches rely
on standards, measures, indicators of
performance, timely and accurate feedback
from schools, and strategic implementation
plans, but they use these to achieve different
ends. These approaches have been used by
government and by development agencies
that have supported programs in the sector.
However, the absence of a coordinating
policy framework to link these various
efforts has prevented them from being as
effective as they could be.
27
Quality Assurance or Control
Quality assurance or control refers to
processes for guaranteeing that schools meet
particular standards. It has three goals: (i)
equivalence – providing a basis for
comparing the credentials of teachers and
school graduates through programs that
include pupil and teacher certification; (ii)
equity – meeting the basic right of even very
poor children to get a decent education
through programs that ensure districts are
providing minimum service standards for
all; and (iii) groundwork – providing a level
of material and human infrastructure that is
equal and high enough for schools and
communities to improve quality as defined
by both national and local expectations.
Quality control is not new to Indonesia.
Indeed, there is hardly any aspect of the
education system that is not regulated, but
regulations and guidelines are often not
followed or implemented as intended for a
variety of reasons, including the
impracticality of the regulations, a lack of
resources to implement the guidelines, a
lack of incentives to encourage compliance,
and an absence of consequences for non-
compliance. The current national education
reform accompanying decentralization aims
to control quality by specifying standards
and processes for certifying students,
teachers, and schools (Box 4.1). Quality
assurance pertaining to individuals (students
and teachers) is administered through
certification programs that are largely
examination-based. The incentives for
compliance with standards are clear, as are
the consequences of failing; for example,
senior secondary students who do not pass
the final national examination are not
allowed to graduate, and candidate teachers
who fail knowledge tests are not certified.
Education Sector Review Volume 1

The standardized examinations14 for
competence of candidate teachers, though
far from ideal, are based on specified
curricular or professional competencies.
Quality assurance as it pertains to individual
schools, or groups of schools as in a district,
is based on self-assessment against some
normative and some self-determined
that are still being discussed are the
incentives for compliance, the consequences
of non-compliance with minimum standards,
and the mechanisms for undertaking
performance or process audits of more than
400 districts and 180,000 schools and
madrasahs. The development of past
programs related to quality standards has
tended to be ad hoc, which has sent

Box 4.1: Minimum Service Standards

Since 2002, there has been an attempt in Indonesia to reach agreement on a set of minimum service
standards. Despite a rocky start, a model-building group led by the MoHA produced a set of draft minimum
standards for the education sector in 2003. A detailed analysis of these draft education standards
undertaken as part of this review suggests that they have several crucial failings that must be addressed
before they can usefully be applied to the sector’s governance and management.
Numbers. There are nearly 200 standards, which is too many. This will lead to a loss of focus and will
increase, rather than decrease, the transaction costs of accountability.
Type. Most of the existing indicators are not true service standards oriented at improving the delivery of
education (for example, the maximum number of days it should take the school to provide a service to
parents) or at increasing mutual accountability between service units (for example, the maximum number of
weeks it should take the Dinas Pendidikan to supply a school with books).
Motivation. The motivation behind these draft standards is overwhelmingly bureaucratic rather than related
to the need for accountability. The standards also appear to have been structured to protect special or sub-
sectoral interests (for example, sports or teachers’ privileges rather than their rights and responsibilities)
rather than to improve the delivery of general and basic education.
Technical quality. Few of the indicators are measurable, at least as currently specified, either in theory or in
practice.
Level to be reached. For many of these indicators it makes little sense to specify an actual level to be
reached because the initial levels of those that can be measured vary tremendously and thus the rate of
change in levels might be a more sensible metric. Furthermore, those who are drafting these standards do
not appear to have seen the logic of allowing competition to determine the actual level to be reached. For
some key variables, the level should indeed be set centrally (albeit with some local input), but in other cases
there is no theoretical or practical justification for setting an absolute level.
Level at which measured. It would require a special effort to measure too many of the indicators; thus they
contain a built-in disincentive. Under the current system, there are few incentives for local education
managers to report even the most basic variables such as enrollment rates.
Source: See Volume 2, Chapter 1, Appendix 1.6 of this review.

standards rather than on external inspections conflicting messages to districts and schools
against absolute standards as in the past, but regarding minimum standards and
the processes involved are still in the procedures for quality assurance. At
planning phase. Some of the basic issues present, the directorate of the MoNE
responsible for basic education has 54
14 projects providing resources directly from
MoNE technical experts acknowledge that the the central government to schools,
student final examinations (Ujian Akhir
Nasional) are not yet adequately standardized in
weakening the ability of district
terms of test taking, although much progress has governments to fulfill their obligatory
been made in this direction. function to plan, finance, and manage

28
Chapter 4
education and making it impossible for them
to monitor centrally funded projects.15
In schools, the quality assurance system is in
its early stages. According to our focus
group discussions with school principals and
teachers in Lampung and Makassar, the
performance monitoring presently being
done in schools still concentrates largely on
financial matters. The principals and
teachers in the focus groups said that they
had not yet discussed setting school
performance standards, and school
supervision and inspection documents
collected during the focus group exercise
show that the tools used by inspectors in
Lampung and Makassar for supervising
schools still emphasize administrative issues
rather than professional development.
As set forth in the Education Law and a
ministerial decree (KepMen, 087/U/2002),16
the post-decentralization model emphasizes
the need for standards. This is evident in the
school accreditation process that is currently
being developed and that will apply to all
public, private, general, and madrasah
schools. Under this system, schools will be
accredited as either “viable” or “not viable”
by a school accreditation body (SAB).
Viable schools will be ranked into three
categories, with the lowest category
including schools that meet some absolute
minimum standards. The aim of the system
is to raise all schools within a district to the
highest category of accreditation by
targeting resources to the schools that need
15
Chapter 2 in Volume 2 of this review contains an
appendix showing the plethora of standard-setting
initiatives that are currently underway.
16
Article 60 of the Education Law stipulates that the
accreditation of schools will be the responsibility of
the government and/or an independent body. The
KepMen 087/U/2002, which predated the law,
established an independent accreditation body (BAS)
and listed nine school components to be evaluated
during accreditation including: the curriculum and the
teaching/learning process; school administration and
management; school/institutional organization,
equipment, and infrastructure; staffing; budgeting;
teachers and students; community participation; and
the school environment and culture.
29
Quality Assurance and Improvement
them the most. The accreditation document
suggests that schools should apply for
accreditation after undertaking their own
evaluation to determine if their inputs and
processes meet national requirements and
their own expectations. If schools feel that
they are viable, then they should request a
visit from the local accreditation body.17
Accreditation must be renewed every four
years. It is unclear, however, what will
happen to those schools that do not meet
minimum accreditation requirements over an
extended period of time. It is anticipated
that many schools, particularly the numerous
small private madrasahs that provide
educational services to many poor children,
especially in remote areas, will fall far short
of the minimum accreditation standards
(Box 4.2).18 The school accreditation policy
states that the national government will
support and help all non-accredited and low
ranking schools, but it is not clear from
where the funding and technical support will
come.
Quality Improvement
Quality improvement is a different approach
that involves upgrading inputs, the learning
environment, teaching practices, school
organization, and school performance. In
Indonesia, these efforts have tended to be
limited to particular geographic areas and to
specific supply and/or demand-side
interventions. Past projects have provided
schools with specific inputs (such as teacher
training, infrastructure repair, or textbooks)
or have funded processes (such as active
learning methods or continuous assessment)
17
Primary and junior secondary schools will apply to
the district body for accreditation, while senior
secondary schools will apply to the province.
18
In 2002, according to MoRA data, 5.7 million
children were enrolled in 37,362 madrasahs
(ibtidaiyah, tsanawiyah, and aliyah, which correspond
to the primary, junior secondary, and senior secondary
levels of regular schools). Numerous community-
organized madrasah diniyahs also serve a large
number of children, but no reliable enrollment rates
are on record for this type of school. In addition,
about 2.7 million children were enrolled in 11,312
pesantrens.
Education Sector Review Volume 1

Box 4.2: Improving the Quality of Madrasah Education

on the supply side, and social mobilization approaches are appropriate when a lack of
In 2002, according to SUSENAS data in 2002, fewer access
and school quality improvement grants on than 10is percent
the keyof problem in an
all children education
were enrolled in
the demand side. The assumption has been system, as was the case in Indonesia until
madrasahs, except at age 14 when madrasah enrollment exceeds 10 percent. Over the last five years, however,
that, if inputs
enrollment are improved,
in madrasahs has grownthen
fasterteaching theregular
than enrollment in mid-1980s, or when schools have
public schools.
and management processes and, ultimately, physical, material, or teaching conditions
school quality will improve. Supply-side
Enrollment that are and
Rate in Regular Schools below the minimum requirements.
Madrasahs

100
90
Percent of children 80
70
60
50
40
30
20
10
0
7 8 9 10 11 12 13 14 15 16 17 18
Age

Data source: SUSENAS, 2002

Average student test scores are lower in madrasahs than in regular public schools in 17 out of 26 provinces,
although their overall averages are not very different. Other evidence indicates that madrasahs lack adequate
school facilities, teaching and learning materials, and trained teachers. Those that are registered or accredited
are considered public madrasahs and receive some funding from the Ministry of Religious Affairs; however,
this funding is often not enough to meet their minimal operational and salary needs. Occasional public
subsidies are available also for private madrasahs (in the form of grants, teacher training, the provision of land
and teaching materials, and the secondment of government teachers), but these schools mostly rely on
community contributions and student fees.

Under the decentralization reform, the government is considering treating all schools (whether public, private,
or madrasah) exactly the same according to one policy under the governance of the MoNE at the central level
and of provincial and district governments at the local level. To integrate madrasahs into the regular school
system will mean not only reconciling the governance and funding structures of public and religious schools
but also addressing critical challenges related to quality. Thus, being integrated into the mainstream education
system will bring both benefits and costs to madrasahs. The benefits include the increased ability of madrasah
graduates to transfer to regular public schools and universities and to find employment. Also, they may receive
greater technical and budgetary support from district governments and communities than they now receive from
the national government. However, there is a risk that the opposite will happen – that madrasahs will receive
less support from district governments, partly because they will not be able to compete for resources against
regular public schools. They have to subject themselves to district oversight and of having to adopt the
district’s general curriculum, to hire qualified teachers, to use textbooks, and to build facilities such as
laboratories that are required by the curriculum. Madrasahs will face a double burden in that they must teach
the public school curriculum as well as a religious curriculum. The Islamic State Institutes (IAINs), which
currently produce the majority of the 450,000 graduates who become teachers in madrasahs, will need to be
integrated into the national teacher training system. Also, madrasahs may find it increasingly difficult to deny
admission to non-Muslim students.

Sources: Aziz (2002); Faiqoh (2002); Jalal (2000); Ministry of National Education/Office of Educational Research and
Development (2002).

30
Chapter 4
Indonesia has experimented with quality
improvement projects for over 30 years, but
the many lessons from these projects have
not been integrated into the way in which
teachers teach and principals manage
schools. This is partly because of low
political willingness at the national level to
follow through on successful models and
partly because there are not enough
professionals in the government and in
schools with the competence to implement
these good practices on a wide scale.
Quality improvement projects have followed
two models – school effectiveness and
school reform in Indonesia. School
effectiveness models, which have been built
on a solid foundation of empirical studies in
developed and developing countries, are
about the mix of inputs that define “the
school climate” and about the “enabling
conditions” and “teaching/ learning process”
that most effectively produce cognitive
achievement. In Indonesia, these programs
were largely expert-driven and developed at
the central level. Very few projects became
nationwide programs, and innovations rarely
spread on their own from school to school.19
In contrast to school effectiveness models,
school reform models are inherently
grounded in management theory,
particularly management for change. These
models emphasize relationships among
stakeholders and recommend making
decisions based on negotiation, standard
measures, comparative and publicly
available information, and accountability to
achieve school development goals. Under
decentralization, this is the key policy that
the Indonesian government has adopted for
improving school quality (Article 51 Law
19
Two exceptions include the active
learning/contextual learning projects (CBSA-SPP) that
established communication channels and innovative
teaching approaches through local teacher groups and
the new competency-based curriculum. The National
Curriculum Center reports that numerous teachers
from Jakarta’s private schools have requested
materials and have obtained guidance from the
Center’s website.
31
Quality Assurance and Improvement
Table 4.1: School Committees Still Not
Fully Engaged
Percentage distribution by frequency of School
Committee meetings
Every week 0.5
Every two weeks 0.7
Every month 18.3
Every six months 43.7
Every year 20.5
Only once in awhile 16.3
Data source: Bali Impact Crisis Survey, 2003
20/2003). School-based management (SBM)
is a form of decentralization in which the
individual school is the primary unit of
improvement and the transfer of
decisionmaking authority to the school is the
primary means through which improvements
can be stimulated and sustained (Malen et al,
1990). Its purpose is to engage people from
the schools’ local communities in planning,
monitoring, and improving school quality by
serving on school committees (Article 56
Law 20/2003).20
Our findings indicate that school committees
are in place in Indonesia but are not yet
operating as instigators of quality
improvement. For example, a survey of 425
schools in Bali in 2003 revealed that 97
percent of schools had a school committee,
mostly consisting of teachers, parents, and
honorary members who might include the
bupati. In more than 80 percent of these
schools, however, the committees met at
most once every six months and played only
a peripheral role in the schools’
decisionmaking processes (Table 4.1).
Similarly, we found in our focus group
discussions with teachers and principals in
Lampung and Makasar and our meetings
with school committees in Central Java and
Yogyakarta that there is confusion about the
role of these committees and a high level of
skepticism about what they can achieve.
Many principals had not yet discussed
performance standards or improvement
20
The model has been tested at the junior secondary
level (in the BOMM and JSE projects, for example)
and is a component of several large projects (such as
the DBEP, SIGP, and BEP).
Education Sector Review
planning with school committees, and there
were not enough public funds to sustain the
committees. This situation has created a
financial burden for parents that has led to
mistrust between schools and communities.
Nevertheless, the focus group participants
reported that decentralization has
empowered teacher and principals and given
them more confidence in their ability to
manage the teaching/learning process.
These mixed reviews were further
confirmed by a 2003 survey of 36 schools in
five districts undertaken by the Managing
Basic Education Project. The survey found
that school committees have been
constituted and that they meet two or three
times a year to discuss problems regarding
facilities and fundraising, but the teachers
felt that the committees were not active
enough.
Policies to Improve the Quality of
Education
We recommend the following policies:
Support National Programs, District
Projects, and School Improvements
As districts and schools begin implementing
both quality assurance and quality
improvement measures, the role of the
central government needs to be redefined.
Instead of undertaking new project-based
initiatives, the MoNE should: (i) phase out
any of their policies that inhibit schools
from managing their own plans; (ii) crack
down on entrenched behavior like patronage
and petty corruption that prevents the
effective use of resources in the system; (iii)
phase in programs that set standards and
rules but not targets for quality management;
(iv) adopt policies that foster quality
improvements, for example, by introducing
regulated market-based incentives to
encourage districts and schools to improve
their performance; (v) develop the central
government’s capacity to provide needed
services to districts, such as better teacher
training, student assessment mechanisms,
32
Volume 1
information collection and processing
systems; and (vi) circulate information on
good practices to schools to spread effective
ideas for school quality improvement as
widely as possible.
Many districts are responding with
enthusiasm and initiative to their new
responsibilities. Having these
responsibilities is giving them a much
greater incentive to assess the education
provided within their boundaries. Because
of the magnitude of the changes involved,
however, the situation at the local level may
be chaotic for a while as institutions redefine
their roles and relationships, debate how
best to allocate and manage resources, and
learn to become more democratic and
accountable to civil society. In addition,
many districts lack the experience and
knowledge to develop multi-year,
information-based plans that address issues
such as low completion rates, poor learning
achievement, and rigid teaching methods.
Inadequate information and obsolete
management information systems also limit
the extent to which districts can plan for the
future effectively. In sum, significant
investment and time will be required before
districts will be able to develop and
implement information-based strategies for
educational development.
Everything that is measured, monitored, and
evaluated is aimed in the end at improving
the performance and practices of schools.
Hence, the bulk of investment in the new
decentralized education system must be at
the school level. Likewise, these
investments must be planned, managed, and
monitored at the school level. Whether they
are meant to rehabilitate crumbling school
buildings or to revise teaching practices, if
they do not happen in and for the schools,
they simply will not yield the required
results – better education quality and higher
student academic achievement.
Chapter 4
Adapt a Balanced Scorecard Approach to
Plan and Manage Support to Districts and
Schools
The balanced scorecard approach is a
concept that can help education managers to
plan and monitor performance measures
across multiple elements or components and
to respond appropriately to those results. 21
If this approach is adopted by districts and
schools, it will streamline the hundreds of
standards and indicators that are currently
being proposed, into a manageable number
of bell-weather indicators. Specifically, the
scorecard can have one to four components
that capture the key priorities of the
education system and the measures of
performance corresponding to each priority.
Four potential components of the scorecard
are :
x Finance: This component includes
human, material, and financial resources
provided to schools (and districts), and
the flow of provisions or funds from the
point of origin to districts or schools.
Current MoNE work on minimum per-
pupil expenditures, formulas for district
to school transfers, performance-based
accounting procedures, procurement
protocols, and accountability
requirements through public disclosure
can be included in this component.
x Minimum conditions of learning: This
component includes safe and healthy
school buildings, equipped classrooms,
and certified and trained teachers. The
MoNE’s work on accreditation
standards, teacher certification
standards, teacher licensing, and criteria
21
An article by Robert Kaplan and David Norton
entitled “The Balanced Scorecard - Measures that
Drive Performance” in the Harvard Business Review
in 1992 sparked interest in the method, and led to their
business bestseller, “The Balanced Scorecard:
Translating Strategy into Action,” published in 1996.
Since that time, many businesses, school districts, and
schools in the United States, Australia, and England
have adopted the method for quality management.
33
Quality Assurance and Improvement
for textbook approval are germane to
this component.
x Stakeholder satisfaction: This
component includes student
achievement, parent satisfaction, the
accomplishment of district and national
goals and targets, and the relevance of
schooling to the enterprise sector. All
standards, indicators, and targets for
student academic achievement, as well
as targets for district enrollment,
transition, and completion rates are
relevant to this component.
x Governance and management: This
component includes processes for
making policies, regulations, or rules,
transparency in decisionmaking,
accountability for decisions, and
community participation. Progress in
implementing school-based
management, whether schools and
districts comply with governance
procedures, transparency in teacher
posting and professional development,
and other school performance standards
pertain to this component.
For each of the four components, districts or
schools can be positioned along a continuum
of key indicators. This is the basic concept
behind school accreditation and district
monitoring, but we propose adding a second
dimension to capture the progress that each
school or district makes in implementing its
own multi-year quality improvement plan.
Taken together, the two dimensions give
four categories of districts or schools: good
getting better, good getting worse, bad
getting better, and bad getting worse (Figure
4.1). Different interventions can then be
determined for each category of district or
school, thus shifting the entire education
system away from a supply- driven, one-
size-fits-all model. This adaptation of the
balanced scorecard approach recognizes that
performance is dynamic and that districts
and schools can get worse as well as better.
Education Sector Review Volume 1

Figure 4. 1: Balanced Scorecard to Determine Appropriate Action for Each District or

School
Better than last performance evaluation

B AD SCH OO L S /DISTR IC TS G ETTIN G G O OD

SC HO O LS / DISTRIC TS
B ETTER GETTING BE TTE R

x Look for innovation and best x Block grant financing

practices x Most resourcing through funds
x Eligible for increased funding (rather than materials or in-kind
through block grants services)
x Recognize achievement in public x Eligible for special grants to
forums become “service providers”

Below Standard Above Standard

Min im um Service Standard

B AD SCH OO LS /DISTR IC TS G E TTIN G G O ODSC HO O LS / DISTRIC TS

W OR SE GE TTING W ORSE

x Close attention from higher x Very common in newly decentralized

authority systems
x Earmarked funds x Examine regulatory framework to
x Intensive capacity building remove policies that may be inhibing
x At risk of losing accreditation performance (e.g. financing formula)
x Site visit to d etermine cause for
performance d rop and collaborate on
remediation

Worse than last performance evaluation

Address Structural Weaknesses of the providers of affordable and effective quality

System improvement services for schools (such as
competent financial advisors, teacher
Schools are no longer directly accountable
trainers, program planners, and information
to the MoNE, but the MoNE is still
systems specialists) outside the big cities.
accountable for the performance of the
At present, the central government has a
education system as a whole. Thus, the
near monopoly on teacher training and the
national level needs to change its focus
development of education materials like
away from specific interventions towards
textbooks, and there are not enough
programs that address underlying structural
competent government and university-based
weaknesses such as the vastly uneven
trainers to meet the growing demand for
capacity of districts,22 the fact that there is
such services under decentralization. The
no incentive for improving school
central government can encourage the
performance, and the fact that there are few
development of these service providers by
22
instituting a program of competitive grants
Capacity in this context includes the district that would stimulate a larger supply of
governments’ policies, infrastructure, trainers.
organization, and bureaucratic procedures, as
well as the skills and knowledge of their staff.

34
Chapter 4
Ensure Equity in Quality Improvement
Indonesia has an admirable record of
adopting pro-poor policies, particularly
during the economic crisis of the late 1990s,
but these gains could be lost unless a pro-
poor agenda is built into the national quality
assurance and improvement program. For
example, if poor communities are to be
expected to share the costs of repairing
schools, then there may be a drop in demand
for education among the very poor. Also, if
district minimum service standards are not
pro-poor, then they might have the
unintended effect of pushing poor children
out of the system unless the worst
performing schools are improved, they are
merged with stronger schools or closed, or
their students are subsidized so they can
afford to enroll in better schools.
Stimulate Demand for and Supply of
Innovations and Good Practice for
Improving Teaching
While projects have helped specific districts
and schools to improve their management
and teaching practices, there is as yet no
systematic way to disseminate successful
ideas for improving teaching and learning
practices available across the whole
education system. Therefore, to encourage
the development of ideas for improving the
quality of teaching and learning, the central
government should set up a national grant-
making institution for educational
development to provide competitive grants
to schools or clusters of schools who come
up with innovative proposals. This agency
should also encourage schools to implement
approaches that have already been proven to
improve teaching practices. For example,
35
Quality Assurance and Improvement
the low attendance rate of children at junior
secondary schools is generally attributed to a
lack of schools of this level, the perceived
lack of relevance of secondary education,
and economic hardship. However, another
possibility is that these schools are not
providing instructional programs that are
sufficiently challenging and
developmentally appropriate for 13- to 15-
year-old students.
From Setting Standards to Meeting
Standards
Once the standards for minimum service,
accreditation, and certification are set, how
will they be implemented and what are the
incentives for implementation? Local
education officials are now accountable for
their performance to two higher authorities –
the local legislature or executive and the
central MoNE. It is still unclear what
responsibilities the central government has
towards those districts that fail to meet
minimum standards over a period of time. If
there are no incentives for compliance or
consequences for non-compliance, then the
standards will not help to assure quality.
The critical unresolved issue of what to do
about non-compliant schools is a
governance issue that should not be left up
to the school accreditation body. Whether
or not to revoke a non-accredited school’s
right to enroll fee-paying students should be
decided by a policymaking level of
government rather than by an independent
body. Similarly, any decision to provide
targeted resources to unaccredited and low-
performing schools should be backed up by
a national commitment to provide districts
with these resources.
Education Sector Review Volume 1

36
 Chapter 5: Teacher Management and Performance
The level of school performance and student
achievement is the result of several factors
but perhaps the single most influential factor
is the quality and performance of the
teaching force. When schools perform well,
it is due to a combination of effective
teachers and strong leadership by the school
principals. The education and experience of
teachers are all important factors in
improving student performance, but
teachers’ freedom to choose their own
methods and books and how much time they
spend on tasks such as preparing lessons and
marking students’ work are also vital
factors.23
As discussed in the previous chapter,
minimum service standards and
accreditation criteria for schools and
teachers are currently being developed.
However, it is not yet clear how the
information from the accreditation and
quality assurance processes will be used to
assist schools and teachers to improve their
performance. Nor is it clear where the
technical capacities would come from to
help schools and teachers. The centralized
top-down approach to in-service training is
no longer appropriate as it is supply-driven
and is divorced from the goals and needs of
23
What do we know about teachers in other countries?
Researchers in the U.S. have found that teachers’
higher cognitive skills, as demonstrated in
standardized tests, are associated with better student
outcomes (Strauss and Sawyer, 1986). Recent
research has also found that on-the-job teacher
training is associated with improved student
performance (Angrist and Lavy, 2001). Rewarding
teachers for what they actually know and do in the
classroom is likely to have a considerable positive
impact on student performance (Odden, 2000), but
measuring and evaluating what teachers know and do
in the classroom is expensive and far from
straightforward. Finally, an analysis of junior
secondary school data from the Third International
Mathematics and Science Study (TIMSS) (Woessman,
2001) showed how institutional characteristics as well
as teacher characteristics contribute to students’
academic performance.
37
individual schools. At the moment, there
are several projects in effect that are taking
various demand-driven approaches to
teachers’ in-service training, but no
systematic evaluation has been done of their
impact on student learning and teacher
performance.
Management Changes under
Decentralization
When teacher management systems are
changing, this can be a good opportunity to
implement new ways to achieve education
goals. However, during the period of
transition, there can be tensions and
opportunistic behavior at the school and
district levels in the employment,
deployment, and promotion of teachers. The
implementation of the school-based
management approach and the creation of
district education boards are changing the
nature of teachers’ accountability and their
incentives to perform well. These changes
mean that decisions about a school’s
resources and goals are made by those who
are in the best position to understand the
circumstances that prevail at that school,
which is highly desirable. However, they
also put a heavier burden on teachers, school
principals, school committees, and parents
to work together to improve students’
achievement levels.
Responsibility for Teacher Employment
and Deployment
At the time of decentralization, large
numbers of civil servants formerly
employed by central government agencies
were relocated to district governments along
with budget allocations to cover their
salaries. The district government became
responsible for employing all teachers in
public schools except those in madrasahs.
These include all civil service teachers
Education Sector Review
(pegawai negeri) in public and private
schools (mostly secondary schools), as well
as honorary teachers (guru honor) who were
previously hired and paid for by the central
government. Also, some districts are
participating in projects that include contract
teachers (guru kontrak) paid for by donor
loans to the central government. The status
of the latter group will be reviewed when
these projects close, although attempts to
reach agreement with district governments
on exit strategies have been pre-empted by
the central government’s decision to recruit
an additional 190,000 contract teachers,
which it is no longer supposed to do.
Although district governments are
responsible for hiring teachers and paying
their salaries, several ambiguities persist.
For example, those madrasah teachers who
are civil servants are still managed by the
MoRA, not by districts. Districts, through
the MoHA, have always been responsible
for deploying teachers, but with the
establishment of school committees, districts
might take on a greater role in selecting and
appointing teachers. Three districts in
Flores, with the support of AusAID, are
piloting just such community participation
in determining the selection criteria for
teachers and head teachers and in the
selection process itself. However, district
governments are bound by a centrally
determined ceiling on the number of
additional civil servants they can recruit (for
any and all sectors). Hence, if a district
government wishes to hire additional
teachers above this ceiling, the district must
pay for them from its non-salary resources.
The salary levels and promotional and
reward systems for civil servants are still set
centrally, although many districts provide
teachers within their jurisdiction with
supplementary benefits and incentives.
While the districts have the option to
dismiss contract and honorary teachers or
not to renew their contracts, it is still not
clear whether or not a district government
can retrench or dismiss civil service
teachers, as they might want to do if they
38
Volume 1
were to rationalize their teacher/student
ratios or to adjust to lower enrollment due to
a declining school-age population, or to fire
non-performers. Currently, many teachers
feel that they cannot apply for vacancies in a
different district. But whether this is true in
the sense that districts may be constrained
by ceilings on civil service budgetary
resources or whether they hold this opinion
in ignorance of the government’s actual
policy on transfers between districts is not
clear.
Responsibility for Setting and Monitoring
Teacher Performance Standards
As already discussed, the MoHA has been
developing minimum service standards,
especially as they apply to districts’
obligatory functions, while the MoNE has
been developing performance standards that
will affect teachers. The Directorate of
Higher Education has developed standards
that must be met by teachers graduating
from the DII teacher education program (a
two-year post-secondary school teaching
diploma needed to teach in primary schools)
and is expecting to extend this exercise for
other initial teacher preparation programs
under its accreditation control (such as the
DIII, which is a three-year diploma required
to teach in junior secondary schools, and S1,
a four-year university degree). These
standards apply to teacher education
programs and define in some detail what a
graduate teacher should know and be able to
do. Complementary to this, the Directorate
of Education Personnel is preparing teacher
competency standards to be used in
assessing teacher performance and
identifying their professional development
needs. It is expected that these competency
standards will be used by quality assurance
teams in the provinces acting on behalf of
the MoNE.
Besides standards regarding qualification
and competency, monitoring is also essential
with respect to teacher behavior in school.
Teacher absenteeism is one of the reasons
why students do not learn. A multi-country
Chapter 5
survey of teacher absences in primary
schools found that Indonesian teachers were
more likely to be absent from the classroom
than five of the eight countries surveyed
(Table 5.1).24
Table 5.1 Primary teacher absence rate
in public schools, 2002-03
Peru 11
Ecuador 14
Papua New Guinea 15
Bangladesh 16
Zambia 17
Indonesia 19
India 25
Uganda 27
Source: Chaudhury et al. (2004)
The role of these quality assurance teams is
still being developed and, as yet, no clear
guidelines have been developed for district
monitoring activities but it is likely that
these will be based on criteria related to the
obligatory functions and minimum service
standards that are also being developed.
24
Primary teacher absence rate is the percentage of
full-time teachers who were absent from a random
sample of primary schools during surprise visits.
Enumerators made two to three rounds of
unannounced visits to each school over a period of
weeks or months, to get a more accurate estimate of
absence and, after verifying workers' schedules,
recorded which of them were absent. The data
provide the number of teachers who were supposed to
be on duty but were in fact absent from the school,
without regard to the reasons for absence. Many
personnel were absent for valid reasons, such as
authorized leave or official duties. Nevertheless, these
absence rates are useful for two reasons: first, because
the reasons for absence given by facility directors
were typically not verifiable; and second, because
even authorized absences reduce the quantity and
quality of public services in these primary schools.
The study covered 147 public and private schools in
10 districts in Indonesia (Chaudhury et al., 2004).
39
Teacher Management and Performance
Responsibility for Teachers’ Professional
Development and Career Development
Initial teacher preparation programs for
upgrading teachers’ qualifications remain
the function of universities and teacher
training institutes that are accredited by the
Directorate of Higher Education. There is
an ongoing discussion of how to make both
the universities and the associated
accrediting board more autonomous and
how to make the process of accreditation
more competitive so that teacher education
programs will become more responsive to
the needs of schools around the country.
Who has the responsibility for the
continuing professional development needs
of teachers is more ambiguous. Most school
and cluster-based professional development
activities have been supported in the past by
projects funded by aid agencies or the
MoNE. Now districts are responsible for
providing in-service training and
professional support activities, but few have
the resources to do so. Provincial teacher
training centers (Balai Pelatihan Guru and
Pusat Peninkatan dan Pelatihan Guru) are
deconcentrated branches of the MoNE and
as such are expected to provide both quality
assurance and in-service teacher education
support to districts.
The ways in which the lifelong education of
teachers relate to teachers’ career,
promotion, and incentive structures have not
been clearly articulated. Districts now are
taking the initiative to link teacher
development programs directly to teachers’
classroom behavior as a way of improving
school quality and are putting a high priority
on providing teachers with adequate skills.
Indeed some school committees have been
using resources to allow teachers to attend
in-service or other professional development
programs.
Teacher Employment and
Deployment
In 2000, there were over 2 million teachers
serving the entire school system in
Education Sector Review
Indonesia, with 1.3 million in primary
schools and 600,000 in junior secondary
schools. It was a relatively young teaching
force, the majority of teachers (64 percent)
being under 40 years old. More than half
were employed in primary schools, and of
these, 93.4 percent were civil servants. In
comparison, only 62 percent of teachers in
junior secondary schools were civil servants.
The large number of teachers who are civil
servants means that districts have a large
wage bill inherited from the centralized era
when teacher-to-school allocation norms
were extremely, if not extravagantly,
defined.
However, Indonesia’s birth rate is falling, its
primary enrollment rates already high, and
the supply of teachers at the primary level
plentiful, so the country is in a position to
reduce the size of the teaching force at the
district level. This would allow districts to
spend more of their resources on quality
inputs and to shift resources to the salaries
of additional teachers at the secondary level.
This does not mean that there are no teacher
shortages, but the shortages in the primary
sector are primarily problems of distribution
rather than supply.
For many districts, the most difficult
questions about increasing access and
efficiency at the primary and secondary
levels are about changing teacher/student
ratios (particularly at the primary school
level) and recruiting secondary school
teachers who are qualified to teach more
than one subject. Nationally,
teacher/student ratios are generous at all
levels, but there are wide differences among
districts. At the primary level, based on the
total number of teachers including head
teachers, religion teachers, sports teachers,
and class teachers, the national teacher/
student ratio is 1:22 in public primary
schools and 1:14 in religious primary
schools. Only 68 percent of teachers are
class teachers; of the remainder, 13 percent
are religion teachers and 6 percent are sports
teachers. Head teachers, religion teachers,
and sports teachers rarely have a full
40
Volume 1
teaching load, regardless of the size of the
school where they are employed. Even
when the teacher/student ratio is calculated
using class teachers only, the national ratio
is 1:32, which is comparable with other
countries in the region.25 At the junior
secondary school level, the teacher/student
ratios are 1:16 in public schools and 1:10 in
madrasah schools. At present, teachers at
this level expect to teach only one subject,
and regardless of a school’s enrollment,
each school expects to have at least 18
teachers.
To rationalize teacher salaries and teacher/
student ratios, several districts have been
merging several small schools into one and
redeploying school principals and teachers
to understaffed schools and are discussing
the relative merits of civil service teachers
and contract teachers.26 In cases where
schools have been merged and the number
of school principal posts have decreased,
there is the danger that tensions will arise
between those who lose out and those who
retain their jobs. As with primary schools,
many small junior secondary schools could
also be amalgamated to form more efficient
units, and many districts are now doing so.
This implies that junior secondary school
teachers will need to be able to teach more
than one subject, which has implications for
teacher training and teacher development
programs. Some small junior secondary
schools are already aiming to recruit
teachers who have majors in at least two
teaching subjects.
We recommend that districts develop their
own formula for calculating teacher
requirements that takes into account the
number of students enrolled in a school
rather than the number of classes. One
25
By comparison, the teacher-student ratio is 1:18 in
Malaysia, 1:35 in the Philippines, 1:20 in China, and
1:32 in Korea in 2000 or thereabout (World Bank,
2004).
26
These discussions are based on the pilot activities of
the District Basic Education Project, and the Unit
Fasilitasi, the MoNE, and Basic Education Project
reports.
Chapter 5
proposal put forward in the past in Indonesia
laid out a sliding scale of teacher
deployment based on school enrollment
(Somerset, 1997). This scale takes into
account the needs of children in lower
primary school classes (highly dependent
learners) that should have fewer students per
teacher and in upper primary classes (more
independent learners) that should have more
students per teacher. Small schools where
multi-grade teaching is the norm often have
fewer students per teacher. To implement
this sliding scale of teacher allocation,
district planners will need timely and
accurate information on the number of
teachers and enrollment rates in each of their
schools. Also, the central government will
need complete information on districts’
needs as well and on how many students
graduates each year from universities and
other institutions in order to broker the
deployment process efficiently.
The MoNE can assist this process by
ensuring that adequate information about the
supply and demand for teachers is available
to local governments, schools, and teachers
themselves. A pilot scheme for identifying
those schools with too many and too few
teachers as a guide for deploying contract
teachers is being implemented as part of the
Basic Education Project. Hopefully, lessons
from this pilot scheme can be used to inform
efforts to deploy regular teachers as well. A
teacher deployment scheme in the
Philippines also provides valuable
experience about how to deploy new
teachers (Box 5.1).
Teacher Professional Development
In the past, teacher quality has been
measured mainly by the level of certification
rather than performance and classroom
results. This is now changing, as can be seen
in the efforts of different directorates in the
MoNE to prepare standards for new
graduates from teacher training courses,
technical competencies that serving teachers
should meet, and minimum service
standards and accreditation criteria for
41
Teacher Management and Performance
schools. The minimum qualification for
primary teachers was set in 1989 as a two-
year post-secondary school teaching
diploma (DII). Yet in 2002, only one-half of
all primary school teachers in Indonesia held
this certificate or a higher qualification. The
minimum qualification for teaching in junior
secondary schools is a three-year diploma
(DIII). By 2002, 67 percent of junior
secondary school teachers held this or a
higher qualification, while the remaining
one-third had only a two-year diploma (DII).
For many teachers, the opportunity to
upgrade to the 1989 standard came through
participating in Open University part-time
distance education programs. However,
there is very little school-based content and
practice in either the formal full-time
programs or the part-time programs, and
what does exist is poorly executed.27
The distribution of those teachers with only
the minimum qualification is uneven across
districts and provinces (Figure 5.1). Because
many districts operate small school systems
and because the pool of qualified teachers is
likely to come from the province as a whole,
these disparities in the distribution of
qualified teachers will need to be addressed
at the provincial level. Provinces need to
find ways to fund and develop programs for
upgrading teacher qualifications that are
Figure 5.1: Districts Vary in Proportion of Primary
Teachers with Minimum Training Qualification,
Percentage of teachers
Sum atra
Sulaw esi
Papua & Eastern Is
Kalim antan
Java
0 20 40 60 80
Notes: The island categories pertain to all provinces in those islands.
Data Source: Ministry of National Education,.
27
A similar situation prevails in Nigeria where
research has shown that little value is added to a
teacher’s performance if he or she acquires a higher
qualification through full-time or part-time study.
Education Sector Review Volume 1

Box 5.1: A New Teacher Deployment Scheme in the Philippines

The Philippines is conducting a pilot program to improve its system for deploying new teachers. Using
student-teacher ratios as the principal indicator, disparities in teacher provision at the regional,
provincial and school level were analyzed and the results were displayed in table form, and also through
GIS mapping. A color-coding scheme to identify areas with relatively generous teacher provision and
areas with teacher shortages of varying severity and estimates of a statistical measure of equity in
access to teachers were employed. It was found that while the national distribution of teachers among
regions (clusters of provinces) is fairly equitable, the distribution among provinces within a region and
the distribution within provinces themselves were much less equitable. In fact, there were high-
shortage schools even in provinces that, in aggregate, were relatively well supplied with teachers.
Older schools, especially those in areas of stable or declining population, tend to be generously staffed,
sometimes showing substantial teacher surpluses, while newer schools, many in poor areas, had
deficits.

This scheme was applied in 2002/3 to the deployment process of new teachers that takes place every
two years. In preparation, provincial teams were required to provide teacher-availability data for all
schools under their jurisdiction. These teams attended two-day workshops, conducted by the
Department of Education staff, to acquaint them with a new-teacher deployment request form and to
train them in using computer software designed to prepare data tables and teacher-deployment maps.
All schools complied with requests to provide the necessary data. The color-coded provincial maps
became the basis for all deployment negotiations among provinces, at the level of principals and with
parliamentary representatives who had a say in how education resources are allocated among schools.

As a result of the new system, of a total of 25,000 new teaching positions, 77 percent of elementary
school teachers and 71 percent of secondary school teachers were allocated to the teacher-shortage
areas. There were still wide variations, however. At the elementary level, one region achieved a
targeting proportion of 97 percent, while two others achieved only 31 percent and 54 percent. At the
secondary level, the range was equally wide: between 96 percent in the most effective region and less
than 50 percent in three less-effective regions. Further steps are to be implemented. In particular, it will
be essential to conduct further training to ensure that at all levels of government and the schools, there
is a critical mass of professional and administrative staff who understand the deployment system, know
how to apply it, and feel committed to its maintenance.

qualitatively better than those that currently
exist and that are compatible with the
principles of school-based management.
There have been a large number of teacher
training projects in Indonesia over the past
30 years (Sweeting, 2001). These projects
have had various objectives including to
revise the curriculum in pre-service
education programs, upgrade the technical
capacities of teacher educators and teacher
education institutions, and develop in-
service training and professional support
systems. While there is considerable
experience to build on, it is time to consider
a new paradigm that takes school
performance as the focal point of the career-
long professional development of teachers.
Indonesia has begun to develop a set of
competency standards for teachers and ways
to measure their performance against these
standards. However, in line with the new
school-based management model, teachers’
professional development needs to be linked
much more closely to the context of the
actual classrooms in which they work and to
the monitoring of school performance and
standards. Teachers need to be given
opportunities to continue learning for their
own self-development, to gain their license
to teach (assuming that such a system is put
in place) or improve their performance, to
enable them to become mentors in induction
programs, and to enable them to be
promoted to posts of responsibility in
schools and/or training programs. This
assumes that appropriate reward systems are

42
Chapter 5 Teacher Management and Performance

Box 5.2: Mexico’s Carrera Magisterial Program

Mexico’s decade-old teacher incentive program, Carrera Magisterial, is a teacher compensation reform
program first implemented in 1994. Teachers who voluntarily join the program agree to participate in
annual performance evaluations and to have their annual salary increases linked to the results of these
evaluations. These performance evaluations, totaling 100 points, consist of: the performance peer
review (10 points), teacher subject matter knowledge as measured by the teacher’s test score (28
points); student examination scores (20 points); teachers’ educational attainment (10 points); their
completion of accredited courses to update their skills (17 points); and years of teaching experience (15
points). The wage bonus associated with the program consists of a percentage of the base wage and can
be quite substantial.

Although the program is voluntary, the number of teachers who have joined the program has increased
substantially since 1994—from 39 percent of teachers in its first year, to 49 percent after three years.
As a result, the proportion of students whose teachers are enrolled in the program more than doubled in
the period between 1994 and 1996 and is now around 25 percent of all students. In addition, in 1997
the percentage of all teaching positions that were filled by an individual participating in the program
was close to 50 percent. Of these, 22 percent have received promotions.

The Carrera Magisterial program appears to be having a significant impact on the Mexican education
system as a recent study found that those students whose teachers participate in the program have
higher average test scores than students whose teachers are not in the program.

Source: Lopez-Acevedo, 2001.

in place that recognize teachers’ Teacher Compensation and Incentives

contributions to school performance. It also
assumes that there are institutions available
to provide such school-based evaluation
programs. An example of such a program in
Mexico indicates its potential benefits (Box
5.2).
However, how these teacher development
programs are to be financed is an important
planning problem. Certainly most districts
probably feel that their current education
budgets barely cover their salary
expenditures and are concerned that teachers
they train may be move to other districts.
For these reasons, districts should not have
to fund teacher development fully. A
mixture of teachers’ own contributions
(since they are the key beneficiaries) and of
proposal-based grants given by the central
government to schools and districts to fund
specific initiatives to improve teacher and
school performance is more appropriate.
Resources for these grants need to be built
into education expenditure allocations at the
district level.
Designing teacher salaries and incentive
structures that attract and retain the best and
the brightest candidates to the teaching
profession is a complex enterprise. In
Indonesia, low salaries are often seen as the
main reason why teachers perform poorly,
have low morale, and tend to be poorly
qualified. However, studies have found that
most primary school teachers and junior
secondary school teachers have monthly
earnings equivalent to or higher than those
of other workers with an equivalent level of
education.28 Although teachers’ salaries in
28
An analysis of labor force data from 2000 (Filmer,
2002) indicated that teachers with qualifications below
the diploma level (about one-third of teachers) have
monthly earnings that are, on average, 22 percent
higher than the monthly earnings of other paid
workers with the same qualifications. The differential
(in terms of monthly salary) is smaller among those
with a first or second level diploma (DI/DII) and then
becomes negative. In other words, while less qualified
teachers seem to be overpaid relative to others with
the same qualifications, the 10 percent of teachers
with a third-level diploma (DIII) and the 24 percent
with a university degree are underpaid, earning 18 and

43
Education Sector Review
Indonesia may be lower than those in other
countries at a similar level of economic
development (such as Chile, the Philippines,
and Thailand), this is partially offset by the
fact that teachers in Indonesia work fewer
hours and have smaller classes on average
(OECD, 2001). MoNE studies of how much
time teachers spend on instructional tasks
indicate that teachers spend only about half
their time in school actually teaching,
perhaps because they are not aware of the
number of hours of instruction and school
days in a year they are obligated to work.
On a per hour basis, teachers earn more than
most other workers and have many more
days off per year. Indeed, during the 2003
national recruitment of contract teachers,
there were two applicants per vacancy,
indicating that current salaries do not appear
to be a major deterrent to aspiring teachers.
However, the situation is not the same for all
teachers, so a review of the entire salary
scale is warranted. In particular, teachers
with a university degree (that is, mostly
those who teach senior secondary students)
earn slightly less than other workers with an
equivalent level of education.
Under decentralization, it is important to
ensure mobility in the teacher labor market,
even while decentralizing the employment
of teachers to, for example, the school level.
The best way to set up teachers’ salary
scales may be to have a national (or
provincial) pay scale or salary grading
system that is based on minimum pay levels
agreed between the central government and
teachers’ unions and professional
associations but to allow districts and
schools to offer supplemental benefits and
allowances to teachers according to their
own criteria.29 For this topping-up process
37 percent less respectively than other paid workers
with the same levels of education.
29
After determining the base salary level, a study in
India (Kingdon, 1996) suggested that salary structures
for teachers were inefficient, with teacher
characteristics that improve student learning hardly
being rewarded while other teacher attributes that have
few discernible learning benefits for the students had a
significant salary pay-offs. This suggests that it would
enhance school efficiency to spend funds on school
44
Volume 1
to work, the DAU allocations to districts
must be disproportionately targeted to
poorer districts so they can afford to add
sufficient incentives to the basic salaries to
ensure that teachers will have an incentive to
apply for jobs in those districts, even for
vacancies in remote schools. Districts
should be responsible for determining
appropriate allowances and top-ups for
teachers working in remote locations or
under difficult conditions. This should not
be done centrally because if it were, then all
schools would try to be classified as
“difficult” so that their teachers would be
paid more. An approach like this has been
tried in Brazil (Box 5.3).
In most cases, it would be better to offer
bonuses to supplement teachers’
remuneration instead of altering their basic
pay scales to reward teachers who take on
extra responsibilities or duties, to attract
better candidates to the teaching profession,
and/or to attract teachers to rural locations
where there is a scarcity of applications for
vacant teaching posts.
Using Teacher Management Systems
to Achieve Education Goals
Decentralization in itself does not
automatically improve the performance of
schools and teachers, but effective teacher
management systems can help to do so.
Over the longer term, several actions are
needed: (i) to devise strategies to strengthen
the professional life of teachers (ii) to
develop transparent mechanisms for schools
to select their own teachers; (iii) to link
school performance and teacher
performance reviews to teachers’ career
development and promotion; and (iv) to
facilities and materials, longer school days, better
management practices, and more skilled teachers, but
that investing in smaller pupil-teacher ratios (in urban
areas where there is no multi-grade teaching), and
investing in teacher experience, training, post-graduate
education, and higher across-the-board teachers’
salaries may not yield enough benefits to be justifiable
in a resource-scarce environment.
Chapter 5 Teacher Management and Performance

Box 5.3: Brazil’s FUNDEF Program and Teacher Compensation Reform

In 1998, Brazil implemented an education finance reform called the Fund for the Maintenance and
Development of Primary Education and Teacher Enhancement (FUNDEF). The main objective of this
fund was to equalize educational opportunities across states and municipalities by guaranteeing a
minimum expenditure per pupil in primary schools throughout the country. Embedded in the reform
was a requirement that at least 60 percent of the additional funds provided by FUNDEF to local
governments must be spent on teachers’ salaries.

The program was expected to improve teacher quality and student outcomes in several ways. First, it
would increase the salaries of existing teachers in regions that, previous to the reform, had had
relatively low teachers’ salaries. This would make teaching a more attractive profession, particularly in
these regions. As a result, it would increase the number of individuals interested in entering teaching
and make teaching an attractive career to more highly skilled individuals, who prior to the reform
would have been likely to choose to enter other professions. Second, local governments could use the
increase in resources for teacher salaries not only to increase the salaries of existing teachers but also to
hire additional teachers, thus enabling them to reduce class sizes, which would probably also improve
student outcomes.

An assessment of the reform in 2002 revealed that regional disparities in teacher pay had been reduced
and that the number of teachers who had at least graduated from secondary school had increased. The
study also showed that the increase in teachers’ compensation and in the number of teachers with at
least a secondary education were positively associated with better student outcomes such as lower
dropout rates and higher pass rates.

Source: World Bank, 2002.

ensure that teachers’ professional obligations for providing basic education of

development covers their initial training,
induction into the teaching profession,
school life, and continuous professional
development. Teachers should be entitled to
support services and professional
development programs. Measures of
teachers’ performance need to be based on
what they add to the teaching and learning
processes in their own classrooms as well as
their contribution to the professional
education community.
In a decentralized teacher management
system, the main role of the central
government should be to set minimum
teaching standards and salary scales and to
develop guidelines for promotions and
incentives. The provincial education units
should be responsible for ensuring that
districts are able to meet their statutory
high quality. They should be equipped to
advise districts on school improvements and
teacher development and to ensure that
teachers are deployed efficiently across
districts. District governments should be
responsible for the employment and
deployment of teachers across schools and
for paying their base salary (the national
minimum) and additional benefits and
incentives, for monitoring teacher
performance, and for ensuring that teachers
have regular access to professional
development programs linked to their school
activities.
Table 5.2 illustrates what might be involved
in putting a national policy framework for
teacher management in place and suggests
who should be responsible for implementing
the various actions and strategies.

45
Education Sector Review
Table 5.2: A Proposed National Framework for a Teacher Management System
Enabling Policies Actions/Strategies
Establishing a transparent
teacher appointment process
based on efficient deployment
norms, school vacancies,
advertisements, selection
criteria, contractual
arrangements, and public
information
Establish a school
performance evaluation
process that is based on
teachers’ collective
responsibility and opportunity
for individual teacher
performance reviews on
request for career
development purposes based
on their value added to
education processes and
outcomes.
Establish a compensation and
rewards system that is clear,
transparent, and guided by
considerations of
qualifications, responsibilities,
and motivations for teachers’
continuous development
Put in place a teacher
professional development
system that is school-based
and performance-led.
Responsibilities
Teacher registration
Teacher deployment norms
Posts of responsibility
Administrative procedures for
districts and school for hiring
teachers
Minimum service standards
Teacher performance standards
Supervisors, evaluators trained in
performance review
Professional support activities
Performance incentives for
schools and teachers
Evaluation processes
Performance review guidelines
Feedback loops between
evaluators and teachers
Accreditation and information
system
Compensation system that
rewards teacher behavior that
improves student achievement
School-based initial teacher
preparation
Induction to teaching and
licensing program that establishes
partnerships between districts,
schools, and licensing body
Teacher classroom performance,
value-added opportunities for
developing professional interests,
pedagogy, subject matter,
leadership roles; linked to rewards
– recognition, financial, and
promotion.
46
Volume 1
School – Identify teachers’ needs, review candidates,
and interview short list, select teachers, inform district
managers
District – Disseminate information on teacher norms
and conditions of employment; prepare initial short
list of candidates, accept school selection, and
advertise results
National – Set guidelines for teacher/student ratios,
posts of responsibilities, minimum qualifications and
experience, conditions of employment; pilot scheme
for identifying teacher-deficit and teacher-surplus
areas and allocating new teachers accordingly
Provincial – Provide quality assurance, facilitate
across-district appointments; assist national
government in piloting deployment scheme
School – Undertake internal self-evaluation
processes, feedback to whom? and incentives, school
development program, teacher development needs,
access resources for school improvement
District – Provide professional support such as
mentoring by better teachers, budgetary resources for
staff development, information systems on teacher
and school performance, disseminate best practices
National – Set minimum service standards and
teacher performance and accreditation standards
Provincial – Provide quality assurance, disseminate
information, identify resource pool for professional
support
District – Assess practice of top-up allowances and
clarify criteria for allocating allowances
National – Pilot and evaluate alternative incentive
systems for “difficult” areas
Provincial – Quantify supply of new teachers
School – Contribute to practicum, provide feedback
to training institutions and technical resource groups,
participate in action research for school development
District – Provide feedback to training institutions
and technical resource groups; placement of new
teachers, support and evaluate candidates, provide
resources for induction and professional development
activities
Province – Provide quality assurance, technical
support resources, disseminate best practices
National – Establish accreditation of teacher
education programs and institutions, respond to
employers’ and service providers’ needs..
 Chapter 6: The Way Forward: Making Decentralization Work for
Education
This review of Indonesia’s education sector has
addressed the familiar issues of quality,
efficiency, and equity but through the special
lens of the current decentralization reform. It
has addressed how the country’s key education
goals (reaching universal enrollment in basic
education and improving the quality of
schooling) are going to be achieved in a system
that is supposed to be managed primarily at the
district rather than at the central level. The
introduction of decentralization three years ago
dramatically changed the rules and processes of
service provision, and all of the relevant
stakeholders are still in the process of
understanding, adapting to, and managing the
implications of those changes. With this
paradigm shift in governance, how education
services are going to be delivered cannot be
“business as usual” for everyone. The review
has identified areas in the regulatory framework
and implementation processes of the
decentralization reform that need to be clarified,
improved, or corrected. Many messages have
emerged from the review, but the two
overarching messages are:
x Improving education quality across the
system is the key educational challenge
for Indonesia today, and even concerns
about equity and serving the poor must
be couched in terms of universal access
to education of acceptable quality.
x Decentralization can potentially help to
meet this quality challenge—by
spreading the governance and
managerial responsibility for improving
better education across different
stakeholders, by strengthening
accountability mechanisms, and by
enhancing incentives to innovate.
However, any delays in clarifying and
rationalizing functions, structures, and
financing throughout the education
47
system and any lack of commitment
from the government to confronting
some difficult implementation issues
could erode the effectiveness of the
reform.
Based on the evidence discussed in the previous
chapters, this chapter presents a detailed policy
agenda that identifies core objectives, specific
recommendations for action (with a
corresponding assessment of how urgently those
actions need to be taken), and suggestions on
which agencies should implement each action.
This agenda is summarized in a policy matrix at
the end of this chapter (Table 6.1). Many
district governments and schools urgently need
some guidance on the extent of their
decentralized responsibilities and assistance on
how to carry them out, so the recommendations
of this review apply to them as much as to the
central government.
A Policy Reform Agenda
The following set of policy recommendations
stem from: (i) the observations and conclusions
of the team that undertook this review of
Indonesia’s education sector, (ii) numerous
documents produced by donor-assisted projects,
and (iii) discussions (in the form of meetings
and interviews) with many stakeholders in the
system, including officials in the central
agencies, provincial and district officials,
teachers, heads teachers, and members of school
committees (including some parents), national
education experts, and the staff of aid agencies.
In addition, in collaboration with the central
government, the team launched a much broader
consultative process with these various
stakeholders in December 2003-January 2004.
The team’s recommendations are as follows.
Education Sector Review
Establish clear and efficient function
assignment within the education system and
align this with appropriate governance and
management structures and financing
arrangements at all levels of the system.
As discussed in previous chapters, the
decentralization laws left the assignment of
governance, managerial, and financing functions
in the education sector vague. Similar functions
and roles have been given to different levels of
government, which is a recipe for replication,
conflict, and chaos. Also, functions and
structures are not aligned (for example, a large
central Ministry of National Education continues
to exist despite the transfer of many of its
responsibilities to lower levels of government)
and financing arrangements do not conform to
functions (as illustrated by the many different
sources of financing for capital expenditures at
the local level). Moreover, some devolved
functions are best left to the national or
provincial levels. Some tasks that can most
efficiently and effectively be carried out at a
level of government higher than the district are:
coordinating the strategic direction of the
education system, setting education standards,
developing technical support systems, assessing
best practices, and encouraging the development
of markets.
There are some other issues that need to be
resolved at a higher level than within the
education sector itself because they also pertain
to other sectors besides education. Resolving
these issues will require bold steps, including
reviewing and revising the decentralization laws
to clarify the assignment of functions, to correct
the misalignments between functions and
structures and between functions and financing
arrangements, and to follow through with
corresponding structural changes. Without these
bold changes, education stakeholders will not be
able to trust the central government’s
commitment to sharing authority and resources,
which will dissipate all of the current impetus
for reform.
48
Volume 1
Reform the structure and processes of the
central Ministry of Education so that it can
fulfill its core functions of developing and
harmonizing education policies and designing
an implementation program, and an investment
and funding plan for those policies, while
ensuring that local governments and civil
society have a voice in this process.
At the moment, the MoNE is not organized in a
way that is consistent with its new core function
of quality management and with the spirit of
decentralization. Currently, the Ministry is
organized by levels of education, which has
tended to produce administrative silos and a
large, unwieldy bureaucracy. There have been
limited initiatives within the Ministry to fulfill
its functions given under the decentralization
reform, but these initiatives have been assigned
mainly to an existing unit (for example, the
Decentralization and Facilitation Unit). What is
needed instead is a fundamental change in the
way the Ministry operates. The MoNE should be
reorganized according to its new major
functions, consistent with its oversight role in a
decentralized education system. In particular,
the Ministry should:
x Harmonize and link new education
policies and programs, and retire any
leftover policies and programs that
undermine the goals under
decentralization. Since decentralization,
various simultaneous efforts in, for
example, standard setting, teacher
certification, and school rehabilitation
and repair have been launched, but it is
vital to coordinate these initiatives to
prevent wasteful duplication and
contradictions. In addition, the MoNE
should participate in a permanent inter-
ministerial forum for resolving any
policy conflicts that affect different
sectors such as the current civil service
regulations that are not appropriate for
managing a decentralized teacher
service.
Chapter 6
x Develop, test, and disseminate new
management and operations systems.
The central government, local
governments, and schools all urgently
need new systems in three areas—
information, budget and expenditure
tracking, and planning, monitoring, and
evaluation. The existing system for
collecting and reporting information on
schools has collapsed since
decentralization. Nor is there any
effective system for keeping track of
district-level education expenditures or
for determining and tracking the
allocation of funding and resources to
schools. There are some local
experiments and projects that are
addressing these issues, but these efforts
are largely sporadic and undocumented.
One of the responsibilities of the central
government is to encourage local
experimentation, identify good
practices, and build on these to create
management and operations systems
that will be effective in a decentralized
context.
x Foster a national education information
system consistent with decentralization.
It is worth singling out this function
because having an effective information
system will be vital for the MoNE to
carry out any of its new functions,
particularly quality assurance. In order
to build an effective information system,
the MoNE should decide what kinds of
information the database should contain,
establish the most effective means for
sharing information between levels of
government, and design and test a
simpler data management system for
districts with very little capacity.
However, any effective information
system requires reliable and timely
input, so collaboration between the
MoNE and the regional governments is
essential because the Ministry’s
bureaucratic power alone will not be
enough to ensure that local governments
and schools collect and report
information. Under decentralization, the
49
The Way Forward
central government can facilitate this
collaboration by giving financial
incentives for information reporting, by
reinforcing local pride at being involved
in producing a joint product (such as
standards and definitions developed
collaboratively over time), and by
stressing to weaker districts that
collaboration will enable them to learn
from what the stronger districts are
doing.
x Develop management and technical
capacities at all levels. Running the
new management and operations
systems will require new skills. The
biggest bottleneck to implementing
devolved functions is the lack of
technical and managerial capacity at the
local level. Building this capacity must
begin with the MoNE defining
performance standards and measures for
all decentralized functions and a
corresponding checklist of basic
competencies needed to carry them out.
This checklist can then be used by each
level of government to assess their own
current capacity, design a program for
upgrading that capacity, and fill future
staff vacancies. Such a variety of skills
will be needed that it is highly unlikely
that a single service provider will be
able to meet all staff development needs.
However, since the current supply is
limited, the government should take
immediate steps to expand and diversify
the supply of service providers.
x Develop and disclose a multi-year plan
for financial, technical and management
assistance to local governments. During
the consultation meetings for this report,
some local leaders lamented the fact that
capital investments in schools are often
financed in a fragmented and unplanned
way by the central government or by aid
agencies, robbing the districts of the
ability to manage their education
systems. There are an estimated 400
projects currently managed by the
MoNE, accounting for the bulk of the
Education Sector Review
APBN allocation for education and
controlling the capital and quality
improvements investments in the sector.
Require provincial and district governments to
prepare and implement multi-year regional
investment and financing plans as well as a
corresponding assistance plan for each school
in accordance with regional goals and with
school capacities and needs.
The experience of other countries has revealed
that giving transfers to lower levels of
governments are more effective when efforts are
also made to build local planning skills, to
increase transparency in the allocation and use
of local funds, and to require accountability in
return for the transfers. For Indonesia, this
means that the central government should:
x Scrap the budgeting process that local
governments and schools go through
each year and replace it with a multi-
year investment plan and an annual
spending plan. These plans should
specify the level, source, and type of
resources needed and whether
investment activities would be under the
direct management of the local
government or of the school
committees.
x Establish a clear funding mechanism to
transfer resources to schools that is easy
to implement and to monitor. First and
foremost, this means ensuring that
schools receive adequate block grants to
cover their basic operating expenses,
including the costs of teaching and non-
teaching staff, instructional supplies,
some staff development, the routine
activities of the school committee, the
maintenance of a school database, the
dissemination of information to parents
and the community, utilities, and light
repair of the school buildings and other
maintenance. Second, to increase
transparency in the allocation of funds
and to enable schools to plan ahead, the
size of these grants should be based on a
formula-based allocation that is non-
50
Volume 1
discretionary and that depends on just a
few key measurable criteria. Besides
these “operational funds,” the
government should make additional
funds available through a proposal-
based grants mechanism to cover the
costs of, for example, staff development
programs or the construction of a new
classroom or laboratory. This funding
channel is discussed in greater detail
below. Third, to facilitate school-based
management, the government should
give this assistance to schools in cash
rather than in kind.
x Disclose publicly the amount of funds
and other assistance that districts will
be giving to each school well before the
beginning of the school year. This will
give the school committee in each
school a chance to finalize its own
spending plan and to raise additional
resources if needed. This is complicated
by the fact that the district and school
budget years do not correspond (January
to December for districts, July to June
for schools). While it is not necessary to
align these budget cycles, local
governments should find a solution that
alleviates this problem for schools.
x Conduct a periodic financial audit of
schools as an input into the preparation
of the multi-year assistance plan for
each school.
x Monitor and evaluate the
implementation of school investment
plans by means of periodic progress
reports, field inspections, and
evaluations of outcomes. All
investment projects should also be
audited, and the results of these audits
should be made public.
x Ensure that routine allocation processes
are responsive to the needs of the poorer
districts and schools by adopting pro-
poor education programs to stimulate
demand consistent with the goals of the
global Education for All initiative.
Chapter 6
To achieve these changes, local governments
need adequate and timely technical assistance to
build their capacity to develop plans and budget
processes, arrange financing, operate the local
education system efficiently, and assist schools.
These technical assistance and training programs
do not have to be provided by the central
government. In fact, considering the size and
diversity of Indonesia’s education system, it
would be better to encourage the development of
a private supply of technical assistance and
training. Specific grants (possibly through the
central government’s development budget – the
DIP – or through the DAK) could be given to
the regions to allow them to procure the services
of national and international experts to help
them to develop their budgeting and planning
skills, to raise their revenues, to track their
expenditures, to manage information flows, and
to assess school performance. Ultimately,
regions will be expected to use their own
budgets to maintain their planning and
management skills and to purchase these
technical services from an organized
marketplace of suppliers.
Help schools to make and implement decisions
that will improve quality, especially those in
poor areas.
Since the mid-1990s, there has been a trend in
Indonesia towards school quality improvement
projects that are school-planned, school-based,
and school-monitored. This trend is consistent
with Education Law 20, which has empowered
schools to make decisions regarding their
governance and management. However, as this
review concludes, there is tremendous variation
in the capacity of schools to exercise the
authority that decentralization has given them.
A big challenge over the next few years is to
develop a viable strategy for raising the capacity
of schools to manage resources and programs.
Another challenge is to ensure that schools meet
the minimum requirements for accreditation as
defined by the central government and that
schools receive sufficient funds to cover their
basic operating expenses. This means that the
first step in improving school quality is to bring
the physical and human infrastructure up to
minimum standards for accreditation and to
51
The Way Forward
ensure that schools are funded at least to the
minimum necessary for operations and
maintenance. Other steps that are needed are to:
x Begin a periodic audit of schools on the
basis of a checklist of standards,
produce scorecards on the basis of this
audit that rate the overall quality and
performance of each school, and
develop a protocol for the public
disclosure of these scorecards.
x Require schools to report their own
expenditures in a timely fashion, but this
will require switching to a multi-year
process in order to give schools enough
time to complete their expenditure
records before the next planning period.
x Establish a proposal-based grants
program that would allow schools to
request extra resources for specific
innovations and experiments. Some
schools are going to be much better at
preparing proposals than other schools,
so this grants program needs to include a
training facility to help build this
capacity in those schools that lack it.
Several ongoing donor-assisted projects
(for example, the DSSD and the DBEP)
have been building similar capacity in
selected areas of the country so some
local governments and schools already
have the required capability as well as
the ability to train school personnel.
x Develop a policy for targeting special
assistance to those schools that do not
meet the with minimum quality
standards, especially in poor areas.
As discussed above, one significant challenge
for the central and local governments is to make
policies related to education quality that
embrace all different types of schools. We
recommend that the Indonesian government
adopt a “one policy roof” for all schools and, as
a first step, should assess all religious and
private schools according to the same national
minimum education quality standards that apply
to public schools. This major task would fill the
Education Sector Review
information gap left by the collapse of the
national annual school census and would
underpin subsequent periodic assessments by
local governments. Also, as part of the school
registration and accreditation processes, local
governments should require these (private and
religious) schools to formulate a plan for
bringing their quality standards up to the
required level and a timetable of the specific
actions and the level of resources that they will
need to do so. Those plans would become
components of a regular accreditation process
for these schools, and their progress in achieving
its goals could be used as a basis for providing
them with targeted assistance in the future.
Establish a teaching service, separate from the
civil service, that includes a transparent
appointment and deployment process and a
professional development system that is school-
based and performance-led.
Effective teacher management systems in
schools are essential for achieving national
education goals. Table 5.1 in the previous
chapter lays out a list of appropriate policies, the
kind of actions required to implement these
policies, and some ideas about who should be
responsible for implementing those actions. The
most critical recommendation is for the
establishment of a separate teaching service with
the following characteristics: merit-based
appointments, transfers, and promotions; school-
based performance evaluations; and professional
development that covers all phases of the
teachers’ career including their initial training,
their induction into the teaching profession,
school life, and continuous professional
development. This would need to be built up
over time.
In a decentralized teacher management system,
the main role of the central government is to set
minimum teaching standards and minimum
salary scales and to develop guidelines for
promotions and incentives. The provincial
education units are responsible for ensuring that
districts are able to meet their statutory
obligation to provide high-quality education.
District governments are responsible for
employing and deploying teachers and for
52
Volume 1
paying their base salaries (the national
minimum) and any additional benefits and
incentives, for monitoring teacher performance,
and for ensuring that teachers have access to
professional development programs. There are
also areas where cooperation among the levels
of government could be highly beneficial. For
example, as discussed in the previous chapter,
central and provincial governments could
increase the efficiency of teacher deployment by
helping districts to develop their own formulas
for calculating their teacher requirements that
take into account the number of students
enrolled in a school rather than the number of
classes in the school.
Educators in Indonesia already feel that there is
a need for a new paradigm for the teaching
profession. Many elements of this new approach
are already in place or are being tried out in a
number of projects. However, developing an
overall framework that defines teachers’
professional development as a lifelong process
should be a priority. Many of the elements of
this framework could be tested in simultaneous
pilot projects by different institutions and in
different districts.
Implementing the Policy Agenda
Finally, we return to the question of how best to
implement the recommended actions outlined in
this chapter.
Supply-side and Demand-led Programs
Both supply-side and demand-side approaches
are needed to fill existing policy and technical
gaps. Supply-side investments are needed to
strengthen the capacity of central education
agencies to make policy, to plan, to set
standards, and to measure the performance of
districts and schools. They are needed also to
stimulate the development of new solutions that
can be used by local governments. These
investments can be made through a national
program or through discrete projects managed
by the central agencies. Either way, it is vital to
link all of the different supply-side investments
in one institution-building agenda instead of
Chapter 6
undertaking them separately with little or no
coordination.
However, in the spirit of decentralization and in
recognition of the great diversity that exists
across Indonesia, demand-side programs that
address the specific needs of provinces, districts,
and schools should be a cornerstone of education
policy. As already mentioned earlier, three
measures in particular need to be taken.
x The central government must provide
adequate block transfers to regional
governments, especially for those with
limited local revenues. The larger the share
of resources that is directed through this
channel rather than through specific
programs, the more it will support the
development of local governance and
management.
x The central government should establish
grants to fund projects initiated by local
schools and communities. These grants will
have the dual objective of stimulating
innovation and experimentation and of
reducing inequality of education quality
among districts. The law allows districts to
collaborate in initiating these projects and
applying for these grants so that they can
take advantage of economies of scale. To
encourage the formation of this kind of
association between districts, the grants
program could award more money to those
proposals that are submitted by an
association of districts.
x The central government should evaluate and
support the education management systems
being developed and used in different
regions.
Learning from Past and Ongoing Efforts
The government of Indonesia and its partners in
the donor community have invested in many
pilot initiatives in education over the past two or
53
The Way Forward
three decades. Many of these initiatives have
borne fruit and have provided valuable lessons
about what kind of programs are effective, but
many other initiatives have either failed to
produce results or petered out because of a lack
of attention from the government or donors.
Under decentralization, there is an even greater
need to learn from these initiatives. Two
immediate steps are needed. The first is to cull
lessons from past programs. During the
preparation of this review, the team compiled all
available documents from or about these
programs and concluded that many types of
interventions have been implemented but that
evidence-based, analytical lessons about their
effectiveness or otherwise have seldom been
drawn. This review has cited lessons from these
past initiatives whenever they have been
available. It may be impossible to recover
lessons from or most of these programs, but it
would be useful for the government and the
donor community to try.
The second immediate step is to identify
ongoing and planned programs that should be
rigorously evaluated. The aim is to build a body
of evidence-based lessons about how to deliver
education services of good quality in a
decentralized setting. It is important to extract
not just localized lessons but also broad ones
that reflect the wide diversity of contexts in
Indonesia. An integral part of this evaluation
effort must be to establish a mechanism to
ensure that these lessons are widely publicized
so that they can be taken into account in national
and local policymaking and school-based
management. Regional meetings held for this
review suggest that the demand for such lessons
exists.
 Table 6.1. Proposed policy agenda for educational development under decentralization

Policy objectives Specific actions Implementing Comments

agency
(Ź means “For
immediate action”)

A. Core policy objective : To improve governance and management

Ź Finalize PPs for Establish committee of technical and management experts to carry out NG in See Chapter 2 for discussion.
Education Law 20 to analysis and consultations, to review roles for national level and prepare consultation with
provide detailed job descriptions for new national functions. and to determine degree to PG and DG
assignments of which resulting assignments can be mandated Especially in the next three years, will need to
governance and evaluate the assignment continuously to assess
Improve governance standards for Education Boards and School
management functions their appropriateness and effectiveness
Committees, and determine degree of need for national regulation.
to all levels
Ź Align structure of Restructure MoNE along function lines NG (MoNE, with See Chapter 2, Box 2.5, and Volume 2, Chapter
central education collaboration of 1 for discussion.
Launch dissemination activities to inform local governments and schools
authority to functions MoHA)
about this new structure
assigned under
decentralization
Ź Build a national Determine the informational base needed to implement and document the NG in Bureaucratic power alone is not enough to
education information policies at district level collaboration with enforce compliance on information reporting.,
system consistent with PG and DG so (a) rely on incentives (e.g. conditional
Determine the information transmission standards between levels of
decentralization supplementary grants to schools); (b) allow local
government, as information, not as software
officials to work with information professionals
Study already-existing cases of good practice of information use at at central level to develop standards and test
school and district level systems; (c) ensure that product is better than
what is readily available from the market; (d)
Design a prototype default system in a few districts that are weak but
customize local system to capacity of districts,
willing to experiment and improve while ensuring comparability across Indonesia.
Test system and disseminate key findings

54
 Policy objectives Specific actions Implementing Comments
agency
(Ź means “For
immediate action”)
All government,
ŹImprove Develop management standards that all government levels, and schools Many ongoing projects (e.g., DSSD, DBEP) do
levels, in
management capacity should meet this, so need to compile lessons, disseminate and
coordination with
throughout the incorporate them into new systems.
Based on function assignments and standards, audit current management each other
education system
systems and capacities throughout the system Where needed and possible, use private
Schools (head providers to conduct audit and systems
Develop plan to restructure organizations and train staff to develop new teachers, teachers, improvements
systems and School
Committees) Process will be ongoing.
Based on standards, develop procedures for local governments and
schools to assess their own management capacity
Develop monitoring and evaluation protocols for capacity development
programs

Establish policy Assess cost-benefit of private provision as it compares with public All levels of
towards private provision government
provision, especially at
secondary and tertiary
education levels
Support capacity of Create funding and selection mechanism to provide legislators with DPR at NG level, Legislative bodies currently have to rely entirely
legislative bodies to demand-led access to academics or consultants to provide studies DPRDs at LG on executive branch for analysis of education
analyze education level policy changes and the state of execution of
Consider funding small technical unit or panel that can be drawn upon
policy policy
repeatedly
Obtain support for Analyze current role of civil society in education, from policy design to NG and LG As democratization and civil society activism
educational goals and policy oversight are relatively new in Indonesia, there are
strategies from civil dangers of misunderstandings and role
Develop training program and materials for government officials on this
society, NGOs, and the confusion.
issue, and train government officials on role of civil society in policy
media
oversight Democratization and decentralization require an
informed citizenry, ideally informed by high-
Improve capacity of the media to analyze and report on education issues,
quality reporting.
by developing training materials for national and regional media and
instituting a yearly award for the best education reporting

55
 Policy objectives Specific actions Implementing Comments
agency
(Ź means “For
immediate action”)
B. Core policy objective : To ensure adequate resources for education, improve the improve the efficiency and effectiveness of resource use, and address equity
concerns

Ź Secure adequate Develop and implement per-student funding formula to determine NG in The per-student funding formula is to be cost-
operational budgets for operational education budget at district level consultation with indexed with adjustments for needs of
education at provincial PG and DG disadvantaged groups, using reasonable cost
Develop and implement per-school funding formula to determine staff
and district levels and estimate of enrollment and agreed-upon quality
deployment
in schools standards and geographic-specific prices.
Establish tracking and reporting systems for regular monitoring and
To improve teacher deployment, base staff
analysis of education financing at all levels
deployment on a per-school rather than per-
student basis, with indicative teacher-student
parameters. See section D below.

Ź Secure adequate Evaluate lessons from current development projects throughout the NG in While this should be initiated immediately, the
development resources system, and develop a plan for consolidating or linking, and for scaling consultation with process will take a few years to complete.
for education in regions up those that are effective and terminating those that are not PG and DG
and in schools, esp. for
Audit investment projects for schools and require public disclosure of
poor regions
results of audit; develop monitoring and evaluation protocols for capacity
development programs
Determine which development projects are best undertaken at regional or
national levels

Ź Improve the Develop multi-year plan of financial, technical and management NG in Develop schema for determining level and
transparency and assistance to district governments that is consistent with regional needs consultation with nature of needed assistance to regions:
predictability of and goals PG and DG Categorize districts according to performance
assistance to local level on multiple education indicators, resource
Publish plan so it is broadly known, and establish mechanism for
governments levels, and technical and management capacity
reporting on performance with respect to the plan.
Data requirements: Up-to-date district-level
information on multiple education indicators,
resource levels, and capacity

56
 Policy objectives Specific actions Implementing Comments
agency
(Ź means “For
immediate action”)
Ź Improve the Each region to develop multi-year plan of financial, technical and Local Use formula funding mechanisms that are non-
transparency and management assistance to schools governments with discretionary and that depend on a few key
predictability of School Committee criteria; see above.
Publicize assistance plan so it is broadly known; meet with School
assistance to schools in each school
Committees to discuss plans and to disclose expenditures at the end of Up-to-date school-level information on multiple
each year education indicators, resource levels, and
capacity; data should be collected on a regular
basis
Ź Establish on- Initiate a transitional program of assistance to districts with greatest need NG in There is wide variation in revenue levels among
granting mechanism to of support for their education programs and schools but with inadequate consultation with districts. Use DAK mechanism and/or loan
support educational revenues to implement their multi-year educational development plan PG and DG funds to assist poorest districts and their schools
development plans of through on-granting, with matching funds to
Invite these districts to submit well-focused proposals in line with their,
regional governments ensure some additionality.
on condition that these districts will use oversight technical services from
and schools
NG or experts for the duration of the funded project

Ź Develop and Evaluate the pro-poor nature of expenditure patterns at all levels of Local These programs should be owned by districts
implement pro-poor government as part of regular performance audits governments and and provinces, using a DAK allocation.
education programs for schools to inform Additionally, national government might want to
Transition step: Establish a special, finite-term, well-targeted pro-poor
schools and students NG establish a mechanism to reward districts that
national program to supplement district financing for schools and
have achieved larger pro-poor progress.
students in selected areas
Lessons are available from SGP and SIGP of
Districts to launch their own similar program over the long-term how these might be implemented.
C. Core policy objective : To improve education quality

57
 Policy objectives Specific actions Implementing Comments
agency
(Ź means “For
immediate action”)

Ź Set standards, Harmonize and link various standard-setting processes for schools and
measures and teachers currently underway
monitoring mechanisms
Initialize school mapping and audit of schools on the basis of checklist of
for both institutions and standards, and produce “balanced scorecards” to rate overall quality and
individuals governance performance of schools and districts.
Develop protocol for public disclosure of balanced scorecards
Develop policy on schools below standards on minimum accreditation
Initiate national media campaign to inform people
All levels of Separate efforts in MoNE, Civil Service, and
government MoF have begun efforts to define standards and
measures..
Useful to assess also good international practice
and Indonesian experiments from other sectors.
Some consensus within education agencies
about definition of minimum learning conditions
and service standards

Ź Set pro-poor x Formalize minimum service standards for local governments in the NG in Separate efforts in MoNE have to define
performance standards area education into appropriate regulation, and harmonize minimum consultation with performance and technical standards and
for districts, provinces service standards developed under MoHA umbrella with standard PG and DG measures.
and the central level setting initiated under new Education Law
District capacities to meet national standards
x Conduct an audit of district performance using the results of school even with flexible timeline is questionable
mapping and school audit activity plus education profiling of district, District capacities to manage standards
to produce “balanced scorecard” for each district monitoring varies widely,
x Set service and performance standards for national level, and audit Risk of increasing inequity unless district
performance of national level against standards standards are pro-poor

Ź Enable and Provide adequate resources for school improvement through proposal Schools and all Risk of increasing inequity unless quality
encourage pro-poor based grants to schools for quality improvements levels of improvement programs are pro-poor
school quality government
Create regulations that empower schools to make decisions that improve Use information on population, status of
improvement school quality education and school mapping to plan for
school rehabilitation, rationalization and system
Locate and disseminate pro-poor good practices, and retire those that are
expansion
ineffective
Stimulate the supply of pro-poor school improvement services
Initiate creation of “one Using quality standards for regular schools, undertake a performance PG and DG in The poorest children are educated in small
regulatory roof” for all audit of all religious and private schools coordination with private schools and Madrasah.

58
 Policy objectives Specific actions Implementing Comments
agency
(Ź means “For
immediate action”)
schools School
Require all these schools to formulate a plan of achieving quality
Committees
standards (providing a timetable of specific actions and level of resources
needed) as part of the registration and accreditation processes
Establish a regular accreditation process for these schools using the
standards, and link this requirement to assistance to these schools
D. Core policy objective : To improve teacher management

Ź Establish a new ŹPrepare guidelines on optional teacher deployment patterns NG to set national This system should be compatible with district
system for teacher standards autonomy and the principles of school-based
Establish mechanisms for districts (as employers) to have access to data management, and based on professional
recruitment Districts to work
on graduates from teacher education programs to assist their teacher partnerships among districts (as employer),
supply and demand planning closely with all
schools, and licensing body
levels including
schools
Ź Establish a teacher Ź Accredit teacher education programs and institutions All levels of Depends on the establishment of transparent
professional government to set teacher appointment processes to be successful.
development system national standards
Measure schools and teacher performance and link this to teacher
that is school-based and
development plans DG to work
performance-led.
Establish mechanisms for grant systems to schools for teacher closely with all
development linked to school performance levels including
schools.
Establish licensing scheme and require teachers to be licensed to teach,
i.e., to have approved qualification, have completed an induction period,
and have been assessed as fit to be licensed with periodic review to
renew licensing
Establish a separate Prepare national legal framework for a teaching service cadre outside the NG in conjunction Requires substantial commitment from many
teaching service that regular civil service that identifies the legal employer, defines the with DG (the GoI agencies including MoNE, MoRA, MoHA,
incorporates system- conditions of teacher contracting, and the optional benefits packages that employers) and MoF, BKN, Menpan.
wide transparent would accompany various hiring and deployment strategies PG (the quality
teacher appointment control
Prepare minimum teaching service standards including conditions of
and deployment mechanism)
service salary levels guidelines for career paths and compliance and

59
 Policy objectives Specific actions Implementing Comments
agency
(Ź means “For
immediate action”)
processes service, salary levels, guidelines for career paths and compliance and
National consensus on definition of basic
quality mechanisms
competencies required of teachers at different
Establish a National Teaching Commission to oversee the teaching levels of education.
service, including initiating legal actions and defining norms or standards
Determine impact of separate national teaching
service on the existing civil service structure,
civil service regulations.
Deployment norms, career structure, and
employment procedures (that incorporate a
compensation and rewards system that is clear,
transparent, guided by considerations of
qualifications, responsibilities and motivations
for continuous development) need to be simple
to understand, relatively straightforward to
execute and accountable to the community.

Notes:

NG=National government; PG=Provincial government; DG=District government

60
Chapter 6 The Way Forward

61
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 Report No. 29506

INDONESIA

EDUCATION IN INDONESIA:
MANAGING THE TRANSITION TO
DECENTRALIZATION
(In Three Volumes) Volume 2

The World Bank

August 2004
 Chapter 1: Governance and Management
under Decentralization
The tools needed for governing and managing
a centralized system are relatively simple –
that is one of the apparent advantages of cen-
tralism. Decentralization has great potential
advantages, but it also requires more skill and
better systems and can, therefore, be a chal-
lenge.
As is the case in most of Indonesia’s public
sector, Indonesian education has traditionally
been quite centralized. Although there have
been some specific moves towards more local
management in the past, these have been lim-
ited to what might better be termed “decon-
centration.” Local offices of the national
Ministry of Education were given manage-
ment responsibilities, but they were not ac-
countable to a local legislature or elected
politicians, and their ability to set policy was
limited. The ability of local citizenry to hold
officials responsible was, both in theory and in
practice, circumscribed. Recently, Laws
22/1999 and 25/1999, as well as the 2003 Edu-
cation Act, constitute a firm thrust towards
decentralization.1 However, the basic decen-
tralization laws are vague and the related regu-
lations tend to be contradictory and often
unrelated to the higher-level Acts. Further-
more, according to interviews conducted for
this review, some policymakers are discussing
the potential benefits of re-centralization. Fi-
nally, there are implementation capacity chal-
lenges as discussed in Hickling Indonesia
(2001b) as well as in Depdiknas (2002), which
found uneven capacity across a range of dis-
tricts. This uncertainty has created anxiety,
which was clearly expressed in a planning
document issued by the MoNE in 2003:
“[there have been] apathies and confusion in
the process of decentralization and autonomy
in education as it restructures the ways of
1
Furthermore, planning documents such as MoNE
(2003) endorse the basic principle that the: “spirit of de-
centralization and regional autonomy will underline the
implementation process… the development planning
policy of each region will have a different priority.” p.2.
1
thinking, especially in issues related to school
and community based management, dichot-
omy between public and private schools… and
education management and coordination.”
(MoNE, 2003). This chapter addresses the
sources of the confusion. It lays out the cur-
rent challenges facing Indonesia in implement-
ing the governance and management aspects
of a decentralized education system. It offers
suggestions for how to move forward.
The chapter’s main message is that as imple-
mentation of decentralization occurred, in
2001 and 2002, policy as to who does what,
why, and with what legitimacy, appeared quite
confused. The current policy changes, starting
in 2003, are not making things much clearer,
and are often technically not the most appro-
priate. Finally, as ideas do get clearer anyway
(e.g., as practices emerge by default in dis-
tricts willing to experiment, in spite of, rather
than because of, clear policy), and appropriate
ideas do emerge, the systems and skills needed
to implement the new, decentralized ways of
doing things, are often missing or not opti-
mized. Furthermore, there are too few good
mechanisms for ensuring the lateral spread of
effective practices that emerge in various lo-
calities.
To support this basic story-line, the chapter is
organized as follows. First, the status of edu-
cation governance and management in Indone-
sia, and the process of decentralization at its
beginning, are analyzed descriptively and in
comparative perspective. Second, some of the
sources of confusion are analyzed. A few im-
portant current policy changes, such as the
2003 Education Act and the process of setting
minimum service standards, are discussed. It
is explained that these might not improve mat-
ters very much, because the basic sources of
confusion are untouched. Third, assuming
some of the basic policy problems can be im-
proved upon, some “technical” or “systems
development” challenges facing Indonesia are
Education Sector Review
discussed. Finally, suggestions for improve-
ment are made.2
The Situation as Decentralization Gets
Under Way
Detailed governance and management diagno-
ses have already been carried out in the last
few years, both by donors (Greene, 2000;
Hickling Indonesia, 2001a and 2001b; and
World Bank, 1998) and by Indonesian schol-
ars (see Sudharto, 2002; Supriyoko, 2002;
Widarinata and Mudyahardja, 2002, and oth-
ers in the same series). Some of the studies
document issues pre-dating the recent laws,
while others focus on the challenges presented
by decentralization. They generally agree that
there is a lack of clarity in the laws and a lack
of capacity at the local level. Thus, Indonesia
now has to continue its efforts to meet pre-
existing goals, such as widening access to
education and improving quality, but in the
new and complex context of decentralization.
Yet, in this section we will show that: a) from
an international perspective, Indonesia’s de-
centralization process is not yet sufficiently
well-embarked; b) based on empirical analyses
of data on local governance and management,
there appear to be serious problems, and rely-
ing on citizen pressure to solve these problems
will not be easy or automatic; and c) there has
2
“Community participation” is not addressed in
this chapter under that name. However, it is clear
that, in discussing effective community-level gov-
ernance through school committees or the role of
civil society in policy definition, we are addressing
the issues normally covered under the rubric of
“community participation.”
2
Volume 2
been, and there still is, widespread confusion
as to who does what, and why. This has been
the situation as decentralization gets under
way.
A Comparative Perspective
Table 1.1 presents a list of the most common
challenges encountered in those countries that
have decentralized their education sectors.3
The table lists each challenge, indicates
whether the challenge appears to be relevant to
the current Indonesian situation, and assesses
whether the challenge in question seems to
impede Indonesia’s decentralization process,
and finally whether Indonesian policymakers
appear to be sufficiently aware of this chal-
lenge, and how it can be confronted. Whether
Indonesia faces these challenges was assessed
via a series of interviews conducted specifi-
cally for this report with various policymakers
and experts on governance and management
issues and with representatives from
Education Boards and school committees.
(See Appendix 1.2 for a complete list of the
experts interviewed.)
Judging by this table, Indonesia’s
decentralization is not yet well-embarked.
The experts running the sector are quite aware
of this, but they are often not clear on what to
do about it.
3
As captured by the knowledge management tools at
http://www1.worldbank.org/education/globaleducationreform/
06.GovernanceReform/governace_ref.htm.
Chapter 1 Governance and Management under Decentralization

Table 1.1 Diagnosis of Governance, Management, and Related Decentralization Challenges

Likeli- Clarity
hood to among
impede Aware- experts
decen- ness on how
traliza- among to
Generic Challenge Present in Indonesia? tion experts solve
1. Unclear or inefficient Yes High Yes No
definition and assignment
of roles and responsibili-
ties (function assignment)
2. Misalignment of re- Difficult to say because function assignment High Insuffi- No
sponsibility and authority is not clear but is likely to be a challenge cient
given unclear legislation
3. State/provincial gov- No. Provinces do not have excessive overall Low NA NA
ernment centralism power relative to kabupaten/kota and (poten-
tially) schools.
4. Lack of a) management Yes, though highly variable. Many kabu- High Insuffi- No
systems and b) skills (ge- paten/kota do not have the skills needed to cient
neric and system-based) to implement education decentralization,
implement the reform though some do. No serious (universal) di-
agnostic against a complete and detailed
function assignment has been done, partly
because function assignment is not clear.
Some samples have been done. Some kabu-
paten/kota are so small it is doubtful they
will ever have the skills, or should, since
they handle just a few thousand students.
5. Lack of community, Difficult to say because it has not been tested Medium Yes No
parent and private sector through wide-scale policy. Pilot projects /untested
participation suggest interest could be high.
6. Lack of organizational/ Yes High Yes No
individual accountability
7. Lack of quality Yes. Both a lack of information that is of High Yes No
information high quality and a relative lack of informa-
tion about quality. The former problem is
worse than the latter.
8. Lack of effective tech- Yes. Most instructions, guidelines and tradi- High Insuffi- No
nical support and guidance tion are aimed at control rather than support. cient
9. Inequity of educational Yes. Spending per student varies greatly. High Insuffi- Some
access, opportunities, and See the chapter on finance in this report. cient
quality
10. Inefficient/unequal re- Yes. Funding formulae are inefficient. See High Insuffi- Some
source allocation the chapter on finance in this report. cient
11. Resistance to decen- There appears to be some resistance at na- Medium Some No
tralization and lack of po- tional level to decentralization of certain
litical and legal support functions, e.g., those related to teacher man-
agement. Belief that certain functions
should be re-centralized is not uncommon.
12. Project design does not Does not appear to be a problem. Decen- NA NA NA
support the decentraliza- tralization pilot projects are ahead of the leg-
tion objectives islation and regulation. Actual problem
seems to be rather in making sure the lessons
learned from pilot projects are taken into ac-
count in legislation and regulation.
13. Institutional and po- This appears to be a problem. Policy varies High Yes Some
litical unpredictability and is often unclear.

3
Education Sector Review
Most of the current challenges in Indonesia
stem from two fundamental problems: (i) the
lack of a clear and efficient assignment of
functions and (ii) a lack of general manage-
ment skills and of the specific management
skills needed to operate decentralized man-
agement systems.4
Almost all other problems derive from these
two. For example, the lack of effective tech-
nical support and guidance is part of the more
generic problem of the absence of manage-
ment systems aligned with the new functions
and with the lack of operational skills.
Empirical Evidence from the Governance
and Decentralization Survey
The final goal of decentralization is to increase
transparency and accountability at the local
level, from principals and teachers to parents
and community, from Kepala Dinas to the
DPRD and the Education Board; to improve
information flows about what clients want
from schools; and to increase local input into
schooling production process and input costs.
What is the evidence on the current situation?
The Governance and Decentralization Survey
(GDS) carried out by the Center for Popula-
tion and Policy Studies (CPPS) at the Univer-
sity of Gajah Mada, with World Bank funding,
is an opinion survey that was applied to many
levels of Indonesian society. The survey was
taken in 2002. It contains a few questions per-
4 supposed to have taken effect.
In Indonesia, there is little historical precedent for
a style of governance that emphasizes self-
regulation and accountability to citizens at the local
level. Historically, Indonesia transited from a po-
litical style that could be characterized as feudal
before colonization, to colonization under the
Dutch, which did not foster accountability to the
average person, and, after 1948, to a national lib-
eration centralist government typical of 20th Cen-
tury post-colonial societies. This explains partly
why there is little natural or instinctive understand-
ing of how to develop policies and procedures that
are clear and lead to local self-governance. How-
ever, in this chapter we start with more proximate
causes.
4
Volume 2
taining to education governance. An analysis
of this survey is presented in Appendix 1.4.
Here we summarize the results of the survey.
Expert opinions of Dinas Pendidikan officials
and school officials regarding objective meas-
ures, such as the time it takes to procure
school books or the time it takes to register a
teacher promotion, suggest that the system is
slow and poorly managed. According to the
opinions of principals, it seems to take about
7.4 months to fulfill a school’s book requisi-
tion and 5.8 months to register a teacher pro-
motion. Interestingly, the opinions on how
long it takes to accomplish these tasks differ
significantly between the school level and the
Dinas Pendidikan. The former estimate the
same tasks to take some 40 percent longer
than the latter. This in itself is suggestive of a
management problem and serious disconnects
in perception.
Both citizens and NGOs perceive education, in
general, to be among the most corrupt and
poorly executed of services in Indonesia, and
DPRD members suggest that they receive
more complaints about education than about
any other service. This may be a biased view,
of course, in the sense that education is a ser-
vice that touches citizens’ lives every day and
in which perhaps the largest proportion of citi-
zens participates on a daily basis. Thus, one
may be more likely to complain about educa-
tion than about other services. Finally, DPRD
members perceived that only in about 28 per-
cent of the cases is the sector regulated at dis-
trict level—a year after decentralization is
Yet, if one asks citizens or parents about their
subjective satisfaction with their children’s
schooling, some 80 percent of parents are sat-
isfied on issues such as fees, discipline, and
quality of learning.5 The range of satisfaction
opinions across districts is extremely narrow:
parents seem to respond very uniformly and
5
The phrasing of the question varied between “are
you satisfied” and “are you unhappy.” The per-
centages were roughly the same in either case.
Chapter 1
always slightly positively. Furthermore, par-
ents’ opinions vary much less than principals’
opinions about management problems, and are
uncorrelated with the expert opinions on ob-
jective problems. Thus, in districts manage-
ment tasks are particularly slow, for example,
parents’ opinions of the system are about the
same as in other districts.
All of these factors taken together suggest that
the sector is indeed poorly managed and gov-
erned but that citizens have fairly low expecta-
tions and uniformly so. This presents obvious
problems for decentralization, in terms of the
degree to which one can use citizens’ expecta-
tions to pressure for improvements in service
provision. Possible solutions might include
introducing a public information campaign
about the education system or encouraging (or
requiring) comparative ranking of schools us-
ing systems such as school or district score-
cards. Culturally appropriate methods of
making citizens aware of their rights and of
the level of service they are entitled to expect
need to be developed. This is discussed fur-
ther below in the context of Minimum Service
Standards (SPMs in the Indonesian acronym).
“Who Does What, and Why” Unclear
The various laws, decrees, and guidelines pro-
pose conflicting and overlapping functions at
the most fundamental level. In one example, a
MoNE report (MoNE, 2002) states on page 17
that “Education Boards and School Commit-
tees control educational management or out-
put.” However, other pages in the same
document (as well as in Kepmen 044/U/2002)
describe the functions of these bodies as being
quite limited and as not really being to control
or manage educational output. In another ex-
ample, according to PP 39/2001, the education
Dinas at the province level is responsible for
“providing education and training in Kabu-
paten/Kota” (Wiradinata and Mudyahardja,
2002) but this is contradicted by Law 22/1999.
Similarly, Keppres No. 165/2000 appears to
contradict Law 22/1999 with regard to the
level of status it accords to the MoNE. It is
quite common to find, in the regulations,
statements such as that level X is supposed to
5
Governance and Management under Decentralization
“help” with some function that belongs to
level Y. For example, according to PP
25/2000, the education Dinas at the province
level is supposed to “help” with providing
textbooks or to “help manage” higher educa-
tion. It is difficult to interpret such regula-
tions, and it is possible that such language
might exacerbate jealousy and turf battles
rather than alleviate them.
Functions are assigned vaguely. For example,
“books” (without specifying which aspect) are
the responsibility of the province. Some ex-
perts advocate that this function should be
given to the districts, but nobody specifies
precisely how the textbooks should be funded,
purchased, and distributed. For example,
Wiradinata and Mudhyahardja (2002) recom-
mend that: “At least in the medium term, some
authorities of the Province (for example, book
supply) should be given to Kabupaten/Kota.”
Yet even though the law now stipulates that
“books” are no longer the responsibility of the
central government, DEPDIKNAS still in-
cludes the provision of books in its planning.
In fact, most education planning at the na-
tional level still includes functions that are (or
logically ought to be) assigned to lower gov-
ernment levels. However the MoNE seems to
spend little on the functions that are logically
nationwide functions like those involving
standard-setting, policy monitoring, training,
and research. Thus, for example, while MoNE
(2003) explains that decentralization is being
taken into account, most of the activities that it
proposes to undertake seem to involve con-
struction or materials procurement, which are
not appropriate activities for a national minis-
try in a country as big as Indonesia, and with a
decentralized education system. 6
6
For example, the activities in the basic education
area (MoNE, 2003, Table III.4) include: construc-
tion of junior high school (SLTP) buildings, con-
struction of additional classrooms, renovation of
SLTP buildings, construction of laboratory rooms,
construction of library rooms, supply of sport and
musical instruments, supply of teaching aids for
mathematics, supply of teaching aids for pure sci-
ence, supply of books for main subjects, and sup-
Education Sector Review
Furthermore, some experts and policymakers
are still proposing function assignments that
seem to run counter to the spirit of decentrali-
zation, as was noted by several of the experts
whom we interviewed. This spirit is also evi-
dent in occasional proposals to re-centralize
(or to keep central) certain aspects of teacher
management. “Next to teacher supply, teacher
rotation needs to be nationally and intensely
managed” (Djohar, 2002, p. vii). As reported
by our interviewees, many aspects of teacher
management are still centralized, including
personnel database management, the registra-
tion of personnel actions, and the transmitting
of this information to the payroll system, even
when many of these aspects are decentralized
in theory. For example, personnel manage-
ment and the payroll function take place at the
district level, but the recording of such actions,
in order for the action to trigger the payroll, is
still centralized.
No means have yet been found to avoid par-
ticularism (meaning, for example, each district
wanting its own teacher training institution or
wanting to appoint only local teachers) while
staying within the spirit of decentralization.
Several interviewees gave us evidence of in-
creasing particularism. This is a reflection
within the education system of a tendency that
can be seen in society at large, such as districts
creating fisheries rights for themselves and
creating local nuisance taxes. Finding a solu-
tion to these problems is part of the process of
clarifying function assignments. It will re-
quire both technical skills and consultations,
and it is hard to imagine that this can take
ply of books for libraries. While the MoNE’s Stra-
tegic Plan contains a chapter that refers to man-
agement development under decentralization, the
activities that it proposes are not really activities
but are re-statements of goals or of the findings of
studies or seem unrealistically limited. For exam-
ple, the Plan states as one of its aims: “to develop a
system and mechanism of educational planning and
budgeting and also to describe the annual targeting
and budgeting,” but this receives no more descrip-
tion than is contained in this quotation and is
scheduled only as one activity (not described) per
year in the Plan. However, it does indicate that the
MoNE is at least aware of the issues.
6
Volume 2
place at district level since it involves inter-
district spillovers.
Heads of the Education Boards/Councils often
do not yet have clear mandates or clear job de-
scriptions, even in districts that are, by reputa-
tion, well-managed and are embracing
decentralization. As became clear in our in-
terviews, many heads of Education Boards,
while dynamic, curious, and eager to help,
seemed unclear about what role they were ex-
pected to play in the new decentralized educa-
tion system.
Although the central government, in principle,
is empowered to set standards, it has been
timid about setting governance standards, in
particular in defining clear roles for districts’
Education Boards and School Committees.
Similarly, there are no national standards for
school funding. This can be seen in Kepmen
No. 044/U/2002.
On the other hand, the central government has
retained those functions whose role and pur-
pose in a decentralized system are not clear or,
if clear, not ideal. For example, the role of the
central inspectorate in the decentralized sys-
tem is not clear. In the view of senior Indone-
sian analysts, the fact that the central
government is holding on to such functions is
not necessarily in the public interest and may
have more to do with either inertia or personal
interest.
There are no clear national standards for han-
dling and reporting information or, if they are
clear, they are not being followed, since re-
porting is very poor. As a result, the education
authorities of the central government have in-
sufficient information even on basic issues
such as enrollment. At this point, for example,
it seems as if basic Education Management In-
formation System (EMIS) data on some 90
percent of the schools at the primary level are
missing from the national computer files,
meaning that only about 10 percent of schools
are reporting their data (or districts are for-
warding the data) to the central government.
At the secondary level, it might be as high as
25 percent, but this is still far from ideal.
Chapter 1
Schools can receive funding (for either recur-
rent or capital expenditures), projects, and in-
puts from any one of three government levels:
the district, the province, and the national gov-
ernment. There do not seem to be clear, func-
tioning protocols that would prevent a
proliferation of procedures and orders and to
ensure that funding goes through a simple
management chain and is received by local
managers as single sources. (Though some
local managers have created “virtual” single-
source funding by internally consolidating the
funding sources. However, this requires con-
siderable skill.)
The absence of clear definitions of functions,
the vacillation and tendencies to re-centralize,
tend to cause widespread anxiety (“apathies
and confusion” as expressed in a MoNE
document), expressed not only by respected
Indonesian education experts but also by in-
ternational donors (Wiradinata and Mudya-
hardja, 2002, pp. vii-viii; Sudharto, 2002, pp.
2-3; Supriyoko, 2002, pp. vii, 18, 19, 26; and
World Bank, 2002b, p. 25).
The Basic Challenge: Clarifying
Governance and Management
Functions
The preceding section provides evidence that
the decentralization process is still quite con-
fused, and that management and governance
of the sector are weak. This section turns to
the basic causes of confusion. As noted
above, two key challenges need to be ad-
dressed before any others: (i) the lack of clar-
ity about the different governance “functions”
and (ii) the lack of clarity about the manage-
ment improvements needed to implement
those functions. We now look closely at each
of these questions in turn.
Unclear Sectoral Organization for
Management and Governance
It emerged during our interviews with experts
that there is as yet no clear agreement on a ba-
sic organizing diagram of the sector (not just
in Depdiknas but in the sector as a whole) set-
7
Governance and Management under Decentralization
ting out the highest-order “functional” division
of labor: that between governance and man-
agement. The distinction between ideal gov-
ernance and management roles is not a precise
science and the distinctions are often muddled
in most societies. But it is clear that the con-
fusions in Indonesia are more fundamental
than in most other societies with serious
growth ambitions. It will be difficult to make
much progress unless there is some consensus
on such basic organizational issues. Outlining
in diagrammatic form how the sector should
function, along these two “lines,” may seem
risky and too prescriptive. However, the lack
of clarity is a real problem. Thus, to achieve
clarity, sooner or later such diagrams will need
to be created, and it is important that, when
they are created, they reflect a clear vision.
The fact that there is confusion at present is
evident in various documents. For example, a
MoNE report (MoNE, 2002b, p. 16) shows an
informal diagram of a section of the govern-
ance structure that implies that Bupatis are ac-
countable to the DPRDs (or vice versa)
through the district-level Education Boards. It
is not clear that this is what Kepmen
044/U/2002 intended, nor is it clear that this
would be a sensible arrangement.
In various proposals it is suggested (or as-
sumed) that School Committees be account-
able to district-level education boards. Thus,
basic confusion around governance and man-
agement hierarchies that could work is quite
common.
Figure 1.1 represents a best attempt to inter-
pret the law and to reflect what is taking place
at the district level based on our interviews. It
also represents a good organization of func-
tions and responsibilities for a country of In-
donesia’s size and complexity.7 An advantage
of diagramming these basic functions is that
this can clarify the differences between the
governance functions and the management
functions. For now, we present this diagram
as merely a work in progress. Clearly, a better
7
Particularly at the school level, since at this level
the regulations are still not finished.
Education Sector Review Volume 2

Figure 1.1 Governance and Managerial Accountability in a Decentralized Indonesia

Governance or Management
Representative Aspect of or Executive Aspect of
Government: Government:
Governance Accountability Management Accountability

President of the
MPR Republic

DPR

MoHA MoF

Depdiknas National
Level
standard-setting report on
(sets standards of reporting organization of
on financial and educational issues) regional government
(accountability is around standards) through MoHA,
reporting to standards

(Provincial Level)

DPRD reporting to standards Regents, Mayors

(Regional People's (Bupati, Walikota)
Representative Kabupaten/
Assembly) Kota
reporting to standards
Education Level
Boards/Councils Head of District
Education Service
(Kepala Dinas
Pendidikan)

reporting to standards

School
Committees Principals
reporting to standards School
Level

picture will emerge as a result of the discus- ity is strongly “horizontal” as be-
sions that this report will stimulate. fits a truly decentralized system.

For the sake of simplicity, the diagram skips 2. The whole notion of a governance
the provincial and sub-district levels. The fol- “line” is unfamiliar in the Indone-
lowing aspects should now be clear: sian context. Given the nature of
public sector management in the
1. There is a clear governance “line” past, the governance and man-
that runs vertically down the left- agement lines were essentially one
hand side of the graphic and a and the same, with governance be-
clear management “line” running ing largely vertical, hierarchical,
down the right side. Accountabil- and indistinguishable from man-

8
Chapter 1
agement. In Law 22/1999 passed
in 1999, it was stipulated that
there should now be a governance
line and that it should be non-
hierarchical and should have a
strong “horizontal” accountability
(for example, Bupati to DPRD).
Yet, the distinctions between the
governance and management lines
are not clear in this law or in sub-
sequent regulations, nor do they
seem to be clear in the minds of
officials as reflected in conflicting
or confused viewpoints in various
official documents and interviews
conducted for this review. Further
policy dialogue and analyses will
be needed to clarify how this
change can work in practice.
3. The diagram makes it clear that at
each level of government there is
one (and ideally only one) gov-
ernance entity and one (and ide-
ally only one) management entity.
4. The diagram highlights the role of
Depdiknas as a national standard-
setting body. However, there are
other important but non-
hierarchical roles that Depdiknas
could or should perform, such as
disseminating best practices and
creating a training facility for up-
grading management skills.
5. The governance line represents
the political entities that are clos-
est to the citizen – the representa-
tives of the electorate. This
includes the DPR, DPRDs, and
School Committees. Note that the
Education Boards play an inter-
mediate and (for now) ambiguous
role and, therefore, straddle the
two lines. The diagram makes it
clear that the concept of an Educa-
tion Board is not entirely clear and
that thinking of it as either a gov-
ernance or management entity is
likely to create problems as there
9
Governance and Management under Decentralization
should ideally be not more than
one management and one govern-
ance entity per level. Making
Education Boards and School
Committees play an advisory role
– a loose form of governance –
might make the most sense. Note
that this is quite different from the
role suggested for School Com-
mittees both in Figure 1.1 and in
various policy documents, such as
the new Education Act (at least if
one interprets it in that direction—
interpretation is key, as the Act
tends to be vague). The suggested
role for School Committees is in-
deed a true governance role with
respect to schools.
6. Because there are no vertical lines
on the governance side, it is clear
that there is no hierarchy in the
governance of the decentralized
education system. It is also clear
that those in the management line
report to those in the governance
line because.
This diagram is not meant to be a prescription.
It is a good interpretation of what the basic
laws require, and of what best international
practice suggests. It also points out the impor-
tance of parental voice at the local level, via
horizontal accountability of schools to parents.
Yet it is meant only to suggest that Indone-
sians ought to try to achieve diagrammatic
clarity of this type in this area.
The Roles Assigned to the Central
Government are not Optimal
Aside from making clear distinctions between
the governance line and the management line,
it is also important to make sure that different
levels in the management line play roles ap-
propriate to a system where governance is
horizontal and non-hierarchical. At the top of
the system, in Indonesia, this has not yet
started to take place. The lack of determina-
tion of a clear and appropriate role for the cen-
ter of the system blocks the emergence of
Education Sector Review
clear and appropriate roles for other levels,
because one of the key roles the center is not
performing well is precisely to help determine
an appropriate (appropriate to a non-
hierarchical governance line) assignment of
functions for other levels.
The central government has not yet adapted to
being at the apex of a decentralized system
rather being than the sole decision-maker as in
the past. The impulse of central politicians
and civil servants is to make things happen,
for example, by building schools or ordering
them to be built. It has not become second na-
ture to them to steer and support, to set norms
and regulate wisely and unobtrusively, to re-
search and disseminate, to encourage innova-
tion, and to provide technical advice to the rest
of the system rather than actually to do the
“direct” work of education, such as managing
teacher deployment or textbook design and
procurement.
This is partly because central government staff
do not yet have the skills to perform their new
functions, and they are understandably wary of
performing functions for which they do not
have the requisite skills. It is also possible
that there are fewer rent-seeking opportunities
for them in their new functions than there
were in their old roles, and therefore they are
resisting abandoning their old ones, which
were more profitable. It is also likely that cen-
tral government staff lack the process man-
agement and substantive skills not only to do
their new jobs well but to finalize the defini-
tion of decentralization. (For example, it takes
a combination of process management skills
and substantive knowledge of public manage-
ment to arrive at solutions that are consen-
sual—and hence likely to be implemented—as
well as technically sound.) This is logical.
Since decentralization, at least in initial design
aspects, is a one-off event, most staff naturally
have not had practice in designing decentrali-
zation processes. As an example, the critical
issue of teacher management, and which as-
pects of this function should be relatively de-
centralized or centralized is still unresolved;
there is also uncertainty about whether it will
be re-centralized, despite the fact that there
10
Volume 2
has been much discussion on the issue (see
Jalal and Musthafa, 2001).
The Current Internal Organization and
Size of Depdiknas Should be Improved.
Given that the role or task of Depdiknas is still
not truly appropriate, the internal organization,
it follows, is also not appropriate. Since the
government of Indonesia has not yet arrived at
a final and optimal function assignment and
since organizational form should follow func-
tion, it is difficult to prescribe improvements
for Depdiknas in any detail. However, judg-
ing by the organizational structures in the na-
tional-level education ministries of many
countries that are decentralized or effective or
both, it can be stated that Indonesia’s Depdi-
knas is not optimally organized to provide
support and guidance to lower-level govern-
ment units and schools.
The national level of modernizing and decen-
tralizing ministries is characterized by:
x Less focus on traditional “level”
line functions such as early child-
hood, primary, and secondary, and
more focus on “transversal” sup-
port functions such as governance
improvement, financial equaliza-
tion, and quality assurance. The
latter functions have more staff
and more status, in a decentralized
or modern ministry, relative to the
“level” functions.
x Relatively less focus on support-
ing direct execution of projects
and hence less staff devoted to in-
spection and audit functions, and
these functions tend to carry less
status.
x If there is procurement, focus is
on the procurement not so much
of goods and construction services
but of analytical and developmen-
tal services.
Chapter 1
x A separation of functions between
organizational units supporting
narrow issues of human resources
or budgeting as they apply to the
national ministry itself and to pro-
jects run by the national level and
support functions that apply to the
country as a whole. For example,
in a modernized ministry, human
resource management, as it ap-
plies nationwide to, for example,
teacher evaluation, deployment,
and development, is quite separate
from human resource manage-
ment as it applies to the staff of
the ministry itself. However, it is
important for the ministry units
working on policy issues to main-
tain practical links with units
working on internal issues, be-
cause the latter tend to have more
experience with practical adminis-
trative matters (such as the han-
dling of personnel databases). If
the units dealing with national
policy on, for example, teacher
management, do not have experi-
ence with the practical issues, they
tend to become too theoretical.
Thus, it is a good idea for the
units making policy on the financ-
ing of schools, for example, to
collaborate with the units super-
vising the financial execution of
nationally run projects and to un-
derstand the policies and proce-
dures used in this execution.
Appendix 1.5 contains a fuller discussion of
these issues and presents, for discussion pur-
poses, an organigram for Depdiknas that might
better suit Indonesia’s needs than the current
organigram.
With regard to size, it should be noted that na-
tional-level ministries in many decentralized
countries have very few staff. One extreme in
the developed world is Canada, where the na-
tional education level in fact functions with a
staff of at most a few dozen, since there is no
national ministry but only a council of provin-
11
Governance and Management under Decentralization
cial ministers with a very small secretariat.
The United States, a country about 25 percent
larger than Indonesia, has around 5,000 educa-
tion staff at the federal level. Some develop-
ing countries, such as China, Argentina, or
South Africa, have as few as a few hundred or
not much more than a thousand staff at the
federal or national level. However, this is not
a problem because the training and capacity of
staff matter much more than their numbers.
How much time that staff spend on highly lev-
eraged task on appropriately assigned func-
tions at the national ministry is also key. Staff
who are extremely capable and who focus
their work on the overall direction of the edu-
cation sector, policy, measurement of outputs,
and comparisons between schools and be-
tween sub-national governments, are much
more important than sheer numbers at the apex
of a decentralized system. Sheer numbers
simply do not make up for a lack of ability in
the tasks that are required in a central ministry
in the context of a decentralized system. So
Indonesia faces the prospect of having too
large a staff, most of whom are not trained to
operate in the decentralized system. This not
only consumes resources needlessly but also
creates a built-in interest group that has an in-
centive to maintain things as they always have
been. This is a serious problem that must be
confronted. The size of the central bureauc-
racy is not just a technical problem, but one
that can politically slow down decentraliza-
tion.
Size is also an issue when it comes to spend-
ing power. The proportion of the total educa-
tion budget spent by the national level in
decentralized countries varies but in general is
higher than the proportion of staff working at
national level. This is because the staff work-
ing at national level in decentralized countries,
as noted above, have a great deal more lever-
age over resources than similar staff in a cen-
tralized system or than similar staff at the
lower levels of government in a decentralized
system. Spending by central education minis-
tries as a percentage of total spending at the
pre-tertiary level in decentralized countries
ranges all the way from less than 10 percent
(in China, the US, South Africa, and Hungary)
Education Sector Review
to as high as 20-40 percent (in Australia, Po-
land, and Spain).
Are Current Policies Helping?
The problems described above were common
as Indonesian decentralization got under way
in 2002. We have seen that the division of la-
bor between levels and branches of govern-
ment is not as clear and productive as it could
be, and that central government has not re-
structured itself, yet, to fully support decen-
tralization. But policy-making has not stood
still. Are the more current policies likely to
fully resolve these problems? In this section
we examine two recent policies or policy
trends, namely the recent Education Act and
the process of setting Minimum Service Stan-
dards. We find that the problems are not
likely to be fully resolved by these initiatives,
at least as they stood as of this writing. How-
ever, the currently evolving policies do often
point in an appropriate general direction. For
example, the Education Act does begin to lay
a better legal basis for school-based manage-
ment or autonomy. Similarly, the notion of
defining standards is, at heart, a good one,
even though the specifics are not yet imple-
mented as well as they could be.
The Education Act as an Instrument of
Governance Design
During the course of this Education Sector
Review, a new law to shape all of Indonesia’s
education system was produced by the Minis-
try of Education and passed by the legislative
assembly, the DPR. The result is Act No.
20/2003, the Act on the National Education
System (English version Gazette No. 78,
2003). An effective education law can be of
considerable assistance in clarifying rights and
responsibilities (or duties and powers) in an
education governance system. Naturally, an
effective law is a necessary but far from suffi-
cient condition for an effective education sys-
tem. Examples of countries with clear
education legislation include South Africa,
Singapore, and Malaysia. Judging from such
examples (and noting that these pointers refer
exclusively to process and governance princi-
12
Volume 2
ple, not to educational substance), effective
law should, among other things:
x Make the rights and responsibilities of
specific actors (as people with the ca-
pacity to delegate) clear. For exam-
ple, the law should say “The Minister
has the responsibility to…” or “par-
ents have the responsibility to…”
x Specify responsibilities in terms of
governance procedures (for example,
procedures for electing governing
bodies to govern schools) as well as
substantive tasks (the actual duties of
governing bodies).
x Deal as much as possible with con-
crete institutions, such as “schools,”
rather than with abstractions, such as
“education.”
x Not give the same responsibilities to
more than one actor.
x Specify processes for resolving con-
tradictions and differences between
actors.
x Deal with observable behavior, not at-
titudes or beliefs.
x Be as specific as possible, leaving
only truly technical details to be de-
fined by subsequent regulations, and
no detail should be postponed until
regulation merely because it presents a
difficult policy problem or social is-
sue.
x Duties and prerogatives as actions that
key actors must take, as opposed to
those that the actors may take, should
be specified. This makes the obliga-
tion to act clearer when the action is
something that an actor must do (an
obligation, responsibility, or duty), but
the right to act is also clearer, when it
is something the actor may do (a right,
or power). Thus, both rights and re-
sponsibilities are spelled out.
x Ensure that definitions are clearly a
matter of clarifying a concept and are
not mixed with statements of intent or
belief or with the specification of ac-
tions.
Chapter 1
As the process of legal drafting proceeded, the
bill noticeably improved in several of these
dimensions. However, the law that was even-
tually signed by the President in July of 2003
is still far from ideal. For example:
x There are at least 35 calls for further
regulation in areas that require major
policy decisions rather than technical
details, thus glossing over key matters.
All of the further regulations appear to
be the duties or rights of the national
government. Should there be regula-
tions issued by a regional government
that contradict the Act, it is not clear
which regulation should prevail.
x Rights and responsibilities too often
devolve on more than one actor (as in
“the [national] government and the re-
gional government must guide and
develop educational staff”). This
phrase appears about 15 times, often
in crucial contexts.
x The nature of the actors is left vague,
so that the Act often specifies that it is
“the government” that has a responsi-
bility, not the Kepala Dinas, or the
Bupati/Walikota, or the national Min-
ister.
x The language used in the law is often
quite vague, saying that some level of
government will “coordinate” or “fa-
cilitate” or “guide” or “assist” or “su-
pervise” some function that another
level is actually in charge of deliver-
ing. Language such as “manage” or
“coordinate” or “facilitate” is often
used without any apparent substance
behind the language or without distin-
guishing what might be meant by the
different versions of the same concept.
x The law seems to attempt to take back
many functions that one would as-
sume to be the prerogative of local
government, based on previous gov-
ernment legislation and regulations.
One example would be the issue of
teacher management and employment,
and another would be the notion that
“the management of national educa-
13
Governance and Management under Decentralization
tion system is the responsibility of the
Minister” (article 50). Though again,
the word “management” is vague and
open to interpretation, because spe-
cific rights and duties are not dis-
cussed.
x Key aspects of the way in which the
system functions are regulated
vaguely on the one hand but over-
regulated on the other. Just to take
one example, the vital issues of stan-
dard-setting, certification, evaluation,
and minimum standards is covered in
at least five different articles (or more
depending on how one interprets the
law) that define duties that are likely
to seriously overlap or duplicate each
other (articles 35, 59, 60, 62, and 66).
It may seem that all these issues can be re-
solved in later regulations. This is certainly
true in principle and happens in all countries.
However, in Indonesia there are two problems
with this.
First, the whole legal and regulatory approach
has been characterized by a lack of specificity,
with the resolution of important problems al-
ways being deferred to a later date. Also, once
the problem has eventually been specifically
addressed, it is often open to a very wide mar-
gin of interpretation. Thus, for example, if the
law appears to create overlaps (for example, as
noted above where five different articles of the
Education Act deal with standard-setting and
quality control), this will simply not be re-
solved during the regulation drafting stage,
because those who are drafting the regulation
work in separate groups, and thus have often
lost sight of the overall context.
A second problem with delaying the resolution
of important problems to a subsequent regula-
tion is that this regulation is unlikely to be
taken as seriously as a fully fledged law
passed by the DPR. This means that there are
more opportunities for mistakes, uninformed
actions, a lack of transparency, and self-
interested actions on the part of the executive
branch (since it is this branch that drafts regu-
lation), and other governance failures is much
Education Sector Review
greater than if the regulation was clearer to
begin with. In any case, in drafting the secon-
dary regulation, it would be wise to follow the
principles of good education regulation, which
are similar to the principles of good education
legislation as listed above (while bearing in
mind that they refer to process and legal prin-
ciples, rather than educational substance). In
particular, it would be a positive development
if the secondary regulation were sufficiently
specific not to require a third regulation to
clarify its details.
In spite of the above problems with the Act, it
is important to note that it does make positive
contributions. It, for example, lays out the le-
gal basis for notions of school autonomy and
school-based management for the first time at
this high level. (In practice there are many pi-
lot experiments taking place, but they have lit-
tle high-level legal basis.)
Minimum Service Standards
Minimum Service Standards (Standar Pelaya-
nan Minimal–SPM) are a potentially useful
tool of management and governance. How-
ever, if misapplied, they can be a hindrance or,
worse, can actually undermine decentralized
governance. This section tackles the issue of
whether SPMs in Indonesia, as the situation
currently stands, are likely to be more of a
help than a hindrance. A more detailed dis-
cussion is presented in Appendix 1.6.
The basic decentralization law, No. 22/1999,
is silent on the issue of minimum standards. It
is Government Regulation No. 25/2000 that
calls for the preparation of guidelines for de-
termining SPMs that must be “implemented”
by local governments. Other recent regula-
tions, such as Government Regulation 105 of
2000, have specified that local government
budgets should be performance-oriented,
based on minimum standards that measure
performance. Government Regulation 108 of
2000 also calls for minimum standards in the
evaluation of local government performance.
In response to these various regulations, Indo-
nesia began in 2002 to devise some SPMs
with some false starts and some confusion due
14
Volume 2
in no small measure to a lack of clarity in the
legislation, including the definition of termi-
nology (see Donor SPM Working Group,
2002, also GTZ-Support for Decentralization
Measures et Al, 2003). (This problem is com-
pounded by the Education Law, No. 20/2003,
as noted in other sections of this chapter.)
However, in spite of a rocky start, the process,
under a MoHA-led “model-building” exercise,
had produced a set of draft minimum stan-
dards for the education sector by mid-2003
(Departemen Pendidikan Nasional/Unit Fasili-
tasi Desentralisasi Pendidikan, 2003).
In gauging the likely impact of minimum
standards on decentralized governance, it is
important to note that there is no accepted
body of theory or practice that can be used as
a solid basis for guidance (see Ferrazzi, 2002).
However, minimum standards can also be ap-
proached from the point of view of more gen-
erally accepted practical and theoretical
notions of decentralization and intergovern-
mental public finance (see Smoke, 2002 and,
for interesting similarities to a very different
sector with salutary lessons for education, see
Baker and Trémolet, 2000). It also makes
sense to anchor the discussion of SPMs in the
specific context of the overall process of de-
centralization in Indonesia. If one then adds
what little international evidence does exist,
one has some basis for judging the current
state of affairs with regard to education SPMs
in Indonesia according to the certain criteria.
A detailed analysis (contained in Appendix
1.6) of the current draft education SPMs sug-
gests the following:
x Numbers: There are too many, nearly
200. This leads to a loss of focus and
increases rather than decreases the
transaction costs of accountability.
Reducing the numbers should be
strongly considered.
x Type: Most of the existing indicators
are not true service standards aimed at
improving service to citizens, such as
the number of days it takes the school
to provide a service to parents, or mu-
tual accountability between service
units, such as the number of weeks it
Chapter 1
takes the Dinas Pendidikan to supply a
school with books or to get a teacher
promoted. Serious work should be
done to include more true service
standards.
x Motivation and use: The motivation
for adopting SPMs is too often the de-
sire for bureaucratic reporting along
the management line rather than citi-
zen accountability along the govern-
ance line. There is insufficient
realization at the national level of the
usefulness of indicators in a decentral-
ized and democratic system as tools
whereby horizontal accountability can
be monitored. There also appears to
be a motivation to protect special or
sub-sectoral interests (such as sports
or teachers’ privileges rather than their
rights and responsibilities as profes-
sional agents) via the setting of SPMs,
with a consequent loss of focus on the
most important issues, such as the de-
livery of general and basic education.
x Technical quality: The technical qual-
ity of a few of the indicators is low.
They are non-measurable, at least as
currently specified, either in theory or
in practice.
x Level to be reached: For many of the
indicators, it makes little sense to
specify an actual level to be reached.
Furthermore, the logic of setting up an
indicator framework and allowing
competition and emulation to deter-
mine the actual level to be reached
appears not to be understood, or, if
understood, utilized in the standard-
setting exercise. For some key vari-
ables, in a country with as little ex-
perience with competitive electoral
processes as Indonesia and with poor
horizontal accountability mechanisms,
the level should be set by the central
government (albeit with a locally de-
termined speed of approach to the
goal), but in other cases there is no
theoretical or practical justification for
setting a level.
15
Governance and Management under Decentralization
x Level at which measured: Too many
of the indicators have little practical
manifestation at the level of the unit of
delivery and/or data on these indica-
tors are often not routinely collected
and reported upward by the actual
service unit (for example, schools or
districts). Thus, it requires special ef-
fort to collect these data—a special ef-
fort that may be in no one’s inherent
interest, even under a good system of
horizontal accountability. Thus, they
will tend not to be collected or re-
ported. These sorts of indicators need
to be reduced or eliminated. Note that
the current system is barely capable of
reporting upward even such basic in-
dicators as enrollment data, or rather
there is a lack of incentive to do so.
It would appear that a large amount of work is
still needed on the education SPMs before
they can be an effective element of the sec-
tor’s governance and management. Standards
are necessary, in principle, however, and a
start has been made.
Governance and Management Systems
Lacking
So far this chapter has noted that policies have
been confusing and often inappropriate, that
there are objective, measurable problems in
the governance of the sector. The more recent
policies have attempted to clarify, and do help
in some ways, but they still need much work.
In particular, practical ways to implement cur-
rent policies are needed. Furthermore, many
progressive districts have proceeded to im-
plement in innovative ways, under the flexibil-
ity allowed by decentralization. In any case,
pilot projects, often donor-funded, have been
experimenting with techniques such as school-
based management and more transparent
school budgeting for many years. However,
this experimentation has thus far taken place
without the education system as a whole
evaluating and learning from these experi-
ences, at a central level (but not necessarily by
Education Sector Review
Depdiknas)8, and then spreading them through
better norming and standardization around
good practices. Also, because experimenta-
tion and pilot testing has been largely up to
donors and innovative Bupatis, progress has
tended to be a hit-or-miss affair. To improve
on this, systematization of good practice is
needed. As central policy also improves, sys-
tems for implementing the improved regula-
tion will be needed. This section lays out
some of these systems needs, as “technical
challenges,” first in governance and then in
management.
Technical Challenges in Governance
There are several important issues relating
specifically to the governance “line.” For ex-
ample, the governance bodies at each level
have no way to evaluate the educational ap-
propriateness of legislation, policies, and regu-
lations independently of the executive branch.
The lack of access by governance bodies to
technical analysis is a reason often given for
placing personnel appointed from the execu-
tive branch of government in governance or
legislative-like bodies. However, it would be
far better to develop research and analysis
mechanisms for governance bodies or to pro-
vide legislatures with research and analysis
consultants rather than to continue setting up
bodies with both elected and appointed mem-
bers from the executive branch.
The current role of Education Boards in the
kabupaten/kota is not necessarily efficient.
Specifically, the division of labor between
Education Boards and DPRDs, between Edu-
cation Boards and kepala dinas, and between
Education Boards and School Committees
does not appear to be effective. Much of the
ongoing discussion in Indonesia on this issue
is not based on sound principles of decentral-
8 eas. The fact that the Committees should, ide-
In Brazil’s CONSED, for example, it is the state educa-
tion secretaries manage the organization, not the national
minister of education. And, as noted elsewhere in this
report, Canada does not even have a national Ministry,
but this does not mean national functions are not per-
formed. There are many ways to perform national func-
tions via bottom-up association, delegation to non-
governmental entities, etc.
16
Volume 2
ized management but instead on random ideas,
tradition, and the experience of other countries
that ignores their different historical and po-
litical contexts. For example, some experts
are suggesting that the Education Boards
should have the same functions as similar
boards in other countries, despite the fact that
the Indonesian context is very different and
that, even in those other countries (such as the
US and Japan), the boards are controversial
and are still evolving.
Again, this is because of the absence of a
management and governance framework
within which these roles could be defined. At
the moment, it seems that each district is being
left to design these roles largely on its own.
(There are some donor projects working in
these areas, but the lessons provided by these
projects do not seem to become part of the
mainstream.) This is not a healthy approach to
decentralization. It leaves the lower levels of
government to wrestle with difficult concep-
tual tasks that may be beyond their capacity,
while taking away from them some of the ac-
tual management tasks, such as teacher man-
agement, that they may be more than capable
of handling. In a sense, the wrong functions
are decentralized.
The duties and powers of School Committees
are a crucial matter to define clearly, and with
a view to autonomy and real school-based
management. Current legislation does not do
this. Current viewpoints, both in general and
relative to school principals, are not clear or
efficient, at least as they are currently defined
either in Kepmen 044/U/2002 or in legislation
such as the 2003 Education Law. For exam-
ple, their roles in finance and teacher man-
agement as outlined in existing regulations
and legislation are not clear, conflict with each
other, and may be too demanding in certain
areas and not demanding enough in other ar-
ally, have oversight rights over all financial
matters, not just the issues related to parent-
raised funds, is not made clear. The relation-
ship between the old BP3s and the School
Committees, and the question of whether BP3s
should even exist after School Committees are
Chapter 1
in power, is not clear. The separation between
the governance and the professional manage-
ment of the pedagogical process is not clear.
The legal status of the School Committees,
relative to their duties, is also not clear. Many
of their duties appear to require them to enter
into contracts with providers (e.g., for minor
physical plant improvements), but it is not
clear whether they have the legal right to enter
into contracts, and if so, how this will be sup-
ported with legal assistance to schools, should
they require it. Again, each district could
simply be left to determine its own issues and
design its own solutions, but this would be in-
efficient.
To study such issues and determine optimal
solutions would require a considerable degree
of technical skill, which is unlikely to be
available at the local level. Also, this kind of
organizational research is subject to econo-
mies of scale, meaning that leaving each one
of around 390 district governments to carry
out its own research and design would be quite
inefficient. Since there is plenty of interna-
tional experience on these issues, it would
make sense for Indonesia to draw on that ex-
pertise at the highest level and for the gov-
ernment to ensure that effective norms or at
least examples of best practices are developed
and made available to districts. Deriving these
lessons and making sure that good practice
spreads is a central function, but not one that
need be performed by Depdiknas.
It is not yet clear how to organize the decen-
tralized governance of religious and/or private
schools without unduly affecting their inde-
pendence. Various interviewees highlighted
the need to resolve this issue carefully.
At the moment, many functions have been de-
centralized too far, in other words down to a
level that does not have the capacity to per-
form that function effectively. Having recog-
nized this, some districts and provinces are
coming together to form agencies that can
handle certain of their functions on a collec-
tive basis (as suggested in Law 22/1999). For
example, various districts in East Java are col-
laborating so that each district develops the
17
Governance and Management under Decentralization
exam for one academic subject for madrasah
schools and then all of the exams are shared
by all of the districts, thus taking advantage of
economies of scale. However, no one has yet
researched the ideal features of this kind of
collaboration, such as what kinds of tasks
would most usefully be performed in collabo-
ration and how to develop effective collabora-
tion agreements.
Technical Challenges in Management
In terms of management, it is clear that the
systems that are currently in place at lower
levels of government are not sufficient to per-
form the many functions that are being allo-
cated to these levels in the decentralization
process. It is also clear that the staff at these
levels do not have the necessary skills to carry
out their new and expanded roles.
Some districts have conducted interesting ex-
periments in improving their budgeting and fi-
nance systems. For example, projects such as
the DSSD have experimented with setting
formulae for district–to–school funding and
with simplifying budgeting formats. The ex-
perimentation allowed or encouraged by de-
centralization will also allow natural variations
in practices (e.g., budgeting systems) to
emerge. For example, one dynamic Bupati
has managed to eliminate certain fees by con-
solidating schools and reducing certain types
of expenditure, thus making room in the
budget to eliminate fees and still cover costs.
However, the lessons from these various ex-
periments have not been systematically docu-
mented at the national level or analyzed to see
how applicable they might be to other situa-
tions. Also, even in those districts that have
been experimenting, it is not always clear that
their evolving financial arrangements are
ideal. For example, it is not clear how much
authority is really being devolved to schools,
even in these districts. It emerged during our
interviews that personnel at the district level
were not always clear about what functions to
decentralize to schools and why. Newer dis-
trict-to-school funding approaches that were
called “block funding” were not really block
funding and seemed to be just as cumbersome
Education Sector Review Volume 2

and intrusive as previous approaches. The
current laws and regulations often seem to
give away authority with one hand but take it
back with the other, leaving the system more
complicated than before and no more decen-
tralized.
There is a great deal of confusion surrounding
the allocation of functions related to teacher
management (including training, recruitment,
deployment, performance evaluation, human
resources databases, payroll, and redeploy-
ment). For example, at present, even though
responsibility for personnel management is
nominally decentralized to the districts, any
personnel actions that would result in changes
in the payroll database must still be communi-
cated to the national level BKN. Because
there are still tensions and unresolved issues in
the assignment of functions, it is not surprising
that districts do not yet have adequate teacher
management systems in place. It is vital to re-
solve the issue of who is responsible for which
teacher management functions because any in-
appropriate assignment of these functions (for
example, if the assignment is bureaucratically
unclear, if it sets up a conflict between bu-
reaucracies, or if it is technically unsound) can
lead to financial and other problems. A case
study is shown in Box 1.1, and in Appendix
1.3, Case 2.
There has not yet been a universal (all dis-
tricts, not just a sample) audit of skills at the
district level covering all functions that would
probably need to be performed at that level
under a rational model of decentralization.
While districts must be responsible for raising
their own skills to the necessary level to carry
out their decentralized functions, the national
government is responsible for the maintenance
of standards. Therefore, it seems appropriate
that the national government should be re-
sponsible for carrying out a nationwide, dis-
trict-level audit of current management skills
and standards. At a minimum, the central
government should devise an instrument and
protocol for carrying out such an audit and for
compiling and communicating the results, as
having each district devise its own protocol
would be a waste of resources. Current infor-
mation systems at the district level do not
seem to be capable of reporting reliable statis-
tics on basic, fundamental issues such as en-
rollment to the central level. As is shown in
Box 1.2 and in Appendix 1.3, Case 5, this has
also been the case in other countries where
education functions have been decentralized.
This is a problem that needs to be addressed.

Box 1.1 In South Africa, a lack of definition as to who could set minimum standards, combined with
sectoral collusion in teacher management, led to the emergence of unfunded mandates and fiscal prob-
lems after decentralization.

[After decentralization] all provinces experienced similar over-spending, in large part due to implementing
nationally determined policies. This included the nationally negotiated salary agreement and new policies in
the education, health, and welfare sectors. Much of this problem was due to the lack of co-ordination be-
tween policymaking and budgeting, and the rapid creation of a decentralized system compounded this prob-
lem. The implementation of nationally agreed policies was not necessarily an unfunded mandate, however.
Such policies (in education, health, and welfare) were implemented with the full support of provincial line
function departments, who were also involved in developing the policies.

Sectoral collusion to secure more funds for a sector proved to be a far stronger factor in overspending than
unfunded mandates. Intergovernmental forums in education, health, and welfare developed national policy
[especially on standards] without taking into account budgetary resources. Many departments adopted an
aggressive policy to address backlogs in deprived black areas. For instance, differences in teacher-pupil ra-
tios were reduced between black and white schools. The increase in personnel expenditure squeezed out ex-
penditure in non-personnel inputs like textbooks, undermining the attainment of the desired outputs.

From: Momoniat, I. No date. “Fiscal Decentralisation in South Africa: A Practitioner’s Perspective”

http://www.worldbank.org/wbi/publicfinance/documents/South%20Africa.pdf

18
Chapter 1 Governance and Management under Decentralization

Box 1.2 In Brazil and Spain, devising good management information systems under decentralization
was difficult and problematic but was possible with effort and partnership.

Brazil

Until 1995, Brazilian education data were outdated and unsystematic. Since there was no recent information
available, directing government policies in that area was a challenge as difficult as flying a plane in the midst
of a storm with no guiding instrument on board. Not only did the lack of up-to-date information jeopardize
the decision-making process, but it also caused huge waste in the allocation of funds. Furthermore, in the
absence of a standard nationwide system of information and indicators, several states had their own data
gathering and processing systems, which were not compatible with each other. For this reason, Brazil could
not even provide international organizations with consistent data on education.

By the beginning of 1995, the latest school census that was available dated back to 1989, and the last fin-
ished survey had been carried out in 1991. Therefore, there was not enough information available to inform
the design of actions aimed at improving the education system. From that year on, the Brazilian educational
information system has gradually undergone a complete reformulation into an integrated, decentralized and
comprehensive structure, which provides all levels and types of education, from early childhood to tertiary
education and more advanced programs.

Gumaraes de Castro, M.H. 2000. “Role and Value of International Education Indicators For National Policy Develop-
ment.” Fourth General Assembly of the OECD Education Indicators Programme (INES). 11 - 13 September - Tokyo,
Japan.
http://www.inep.gov.br/download/internacional/idioma/Role%20and%20value%20of%20international%20indicators%2
0for%20national%20policy%20development.pdf.

Spain

As the decentralization process unfolded in the 1980s, the country needed a planning mechanism that would
coordinate the educational policies and programs being developed and executed by the MEC and the decen-
tralized autonomous communities (de jure). One reason why such a coordinating mechanism was necessary
was that, soon after the decentralization process began, the capacity to gather and reproduce nationwide edu-
cational statistics was lost because various regions had begun gathering their own data using formats that
were not comparable and thus could not be aggregated at the national level.

From Hanson, M. 2000. “Democratization and Educational Decentralization in Spain: A Twenty Year Struggle for Re-
form.” Country Studies. Education Reform and Management Publication Series. Vol. 1, No. 3, June 2000.
http://www1.worldbank.org/education/globaleducationreform/pdf/hanson.pdf.

The possible increase in corruption under de-
centralization has been brought up in the dis-
cussions held as a part of this review. In
principle, decentralization has the scope either
to increase or to reduce corruption – the key is
the actual design of institutions and systems.
For example, ensuring that resources flow as
per capita grants, ensuring that all actors know
the amount of the grants to which they are en-
titled and when the funds will arrive, and en-
suring that actors have oversight over each
other (parents can check what the principal
does, and the principal can check what parents
do) can all help to limit the scope for corrup-
tion. On the other hand, having too many
funding and provisioning channels into
schools creates great opportunities for corrup-
tion or at least for waste. Funding and provi-
sioning that is discretionary and not based on a
simple formula also creates opportunities for
corruption, waste, and patronage. However,
having too many controls could make systems
too cumbersome. Therefore, extreme care
needs to be taken in the design of such sys-
tems. What is crucial is to bear the potential
for corruption in mind when designing decen-
tralized systems and to create the appropriate

19
Education Sector Review
checks and balances without paralyzing flows
of resources.
There is considerable inequality within dis-
tricts in terms of both funding and education
achievement in Indonesia already, and it is not
clear that there are any effective mechanisms
for reducing this source of inequality in the
education sector. As we noted above, asym-
metric decentralization of governance and
management, along with funding targeted to-
wards the poorest districts and populations
within districts, may be one way to reduce ex-
cessive inequality.
Governance and Management
Development Tasks
As this chapter makes clear, certain actions
need to be taken to clarify the roles and func-
tions of the various levels of government in
the governance and management of the new
decentralized education system. These actions
are listed here, starting with the most impor-
tant and urgent. It is important to note that
these steps are not equal in costs or in time.
Step 1: Clarify and assign functions. This is
the step that must, in principle, be taken before
all others because, without a clear assignment
of functions, nothing else can be clarified.
This can be done through a set of well-guided,
specific technical consultations. In other
words, it is possible to have a technically in-
formed yet consultative process that leads to a
solid conclusion; it need not be left up to
chance, pure politics, or relatively non-
technical “least-common denominator” con-
sultations. Furthermore, it is important that
the consultation process yields conclusive rec-
ommendations on the assignment of fairly de-
tailed sub-functions. This consultative process
(which should last from about six months to a
year) can be seen as a preliminary form of dis-
semination of the conclusions reached as a re-
sult of the consultations, but true
dissemination should be a separate and ongo-
ing process. In practice it may not be possible
to be fully sequential, and to take this step
first. Districts are moving ahead in any case.
However, it is still worth doing, because im-
20
Volume 2
proving and clarifying function definition can
be informed by emerging practice, in any case,
and because it will help further clarify and
validate experimentation.
Step 2: Thoroughly inventory existing man-
agement systems, skills stocks, and innovation
capacity at the local level. Based on how
functions are assigned in step 1, the next step
should be to carry out thorough inventory
management systems at all levels, particularly
in the areas of finance, the management of
personnel (particularly teachers), procurement,
and information management. This search
should be conducted by means of nationwide
consultations with both system users and sys-
tem developers at all levels or by means of
empirical research. An integral aspect of this
stocktaking exercise should be to recommend
improvements and to develop a time-phased,
demand-led plan for improving management
systems. Another important aspect of the ex-
ercise should be to carry out an audit of the
current management skills of personnel at
every level of governance and to map the na-
tion’s lack of and need for these skills. The
exercise should go on to suggest ways to de-
velop a system (possibly run by outside pro-
viders) for upgrading skills and a facility for
continuously assessing both systems develop-
ment and the skills upgrading system, includ-
ing a yearly or twice yearly repetition of the
nationwide consultation process. The proposed
approach should constitute a program that is
flexible enough to be able to receive funding
from a variety of donors without each of these
donors having to develop a separate project
that would be expensive and time-consuming
to design.
Of all the existing systems and skills, perhaps
the most crucial one that needs to be further
strengthened, documented, and fed into a sys-
tem (not necessarily central) of lesson-
spreading, is the set of relations of account-
ability between schools and parent commu-
nity. This will not be an easy task, as many
parents themselves may have lowered expecta-
tions, conditioned by years of centralism.
Chapter 1 Governance and Management under Decentralization

Step 3: Upgrade systems and skills. This step tice, it might be wise to set a five-year time-
will be the most costly and long-lasting by far. frame for completing the systems development
In theory, it could go on forever, but in prac- and skills upgrading process.

21
Education Sector Review
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Chapter 1 Governance and Management under Decentralization

Appendix 1.1. List of Governance and Management Problems

In a discussion document of limited length, it
is not possible to list in detail all of the impor-
tant issues that still need to be resolved. For
that reason, the following table contains a
more comprehensive catalog of such issues
than was possible in the main text but without
a full discussion of each one. Only a few are
discussed in greater detail in the main text to
give the reader a sense of the nuances in-
volved in some of the most important cases.
In the table below, “national” does not neces-
sarily pertain to a bureaucratic or organiza-
tional entity. Some of these functions are
indeed functions that need to take place at the
MoNE, but others can be performed by some
other national ministry. Still others could be
performed by a national-level organization (or
any organization at a level of government
higher than the district) but not necessarily in
a ministry. For example, several districts
could get together to create a multi-district
agency to carry out a certain task. In some in-
stances, a ministry or some other agency may
have undertaken tasks on behalf of a district,
which is why the list for the “national” level is
longer than the list of issues at the local level.
We are not advocating a large role for the cen-
tral government under decentralization. Nev-
ertheless, clearly the national or provincial
governments could play an important role by
taking advantage of economies of scale in
helping districts to develop management sys-
tems. Finally, note that province-level issues
are not fully explained because, in large part,
function assignment itself is not finished and,
while the roles for the national and district
levels are relatively obvious and easy to sug-
gest based on logic, this is not so much the
case for the province level.

Governance and Management Issues

Management “Line” Governance “Line”
National 1. Increase the MoNE’s abil- 11. Develop clearer sense and acceptance
level ity to assess decentralized best at the MoNE of its national role in a decentral-
practice by improving its monitor- ized setting. This needs to be done with more
ing and evaluation functions/roles. technical proficiency and depth than has been
2. Change the nature of the done thus far.
Inspectorate towards evaluating 12. Finalize implementing rules and pro-
whether sub-national levels are fol- cedures for Education Law
lowing general standards. 13. Resolve governance standards for
3. Set up permanent facility Education Boards as well as School Committees,
for evaluating and improving stan- while making sure these align with the
dards. forthcoming law. Standards should be
4. Assess skills profile mandatory. If not, then DEPDIKNAS should
needed to carry out assigned func- offer more than one non-mandatory model with
tions at all system levels. clear reasons for preferring one over another
5. Carry out systematic backed up by good research.
management and governance skills 14. Develop criteria for asymmetric decen-
audit against assigned governance tralization, since not all schools are likely to be
and management functions and the ready to take on new powers at the same time.
skills required. 15. Resolve issue of decentralization of re-
6. Create, fund, and manage ligious and/or private education. Come up with
a facility for upgrading manage- feasible district-level governance model that is
ment and governance capacity and standard across districts.
skills at sub-national levels accord- 16. Finalize initial standards and dissemi-
ing to demand. Evaluate feasibility/ nate this information.
requirements of outsourcing if this 17. Convene panel of experts to finalize
is an option. function assignment in detail.

25
Education Sector Review
Governance and Management Issues
Management “Line”
7. Begin formal and in-
depth process of “re-educating”
MoNE staff in their roles and func-
tions in a decentralized setting.
8. Inventory (in all districts) by training education reporters and instituting a
the existing financial management
systems, personnel (teacher) man-
agement systems, and educational
materials procurement systems.
Evaluate problems, assess interest-
ing experiments developed under
decentralization, develop approach
to funding, and develop systems
usable by districts according to
demand.
9. Assess and reproduce
methods whereby lower-level gov-
ernments can collaborate to create
“agency” bodies to take advantage
of economies of scale.
10. Improve management
and governance systems to reduce
corruption under decentralization.
District 25. Require districts to assess
level their own management and gov-
ernance skills against their as-
signed functions
26. Start demand-led skills
upgrading by creating and using
capacity-building facility
27. Require districts to assess
their practices against standards
and start reporting according to
standards, both up the management
line (to Bupati/ Walikota) and
horizontally to the DPRD
28. Develop or apply nation-
ally developed systems for provid-
ing team-based, school-oriented (as
opposed to problem-oriented all-
school)response to schools not
coming up to performance stan-
dards.
29. Collaborate with each
other and with national or provin-
cial governments in developing fi-
nancial, personnel, procurement,
and information systems.
30. Apply systems as devel-
oped.
26
Volume 2
Governance “Line”
18. Ensure the DPR has access to good,
independent, technical advice.
19. Increase capacity of the media to re-
port accurately on education issues for example
prize for the best education reporter of the year.
20. Produce “map” of civil society, includ-
ing NGOs, to educate government officials on
this nature of NGOs and civil society. Develop
training materials and protocols for government
officials on this theme.
21. Develop approach for ensuring sub-
stantive discussion of education issues in the
2004 elections.
22. Develop “scorecard” system for rat-
ing/ranking districts, Bupatis, etc., in their per-
formance of education functions.
23. Develop approach for improving pol-
icy dialogue about education in government (ex-
ecutive and legislative, at national and possibly
district level), in civil society, and between the
two.
24. Train staff of lower levels to learn
from governance experience elsewhere as a
means of raising their own performance to stan-
dard.
31. Apply processes for determining dis-
trict-specific standards as well as socializing na-
tional standards.
32. Ensure that DPRDs know how to hold
Bupati/Walikota accountable for their education
responsibilities.
33. Develop and apply better norms and
guidelines to the functioning of Education
Boards and School Committees, or apply na-
tional ones.
34. Apply system for dissemination and
reporting on school-specific performance against
standards. Ensure that Education
Board/Councils, DPRDs, schools and School
Committees know about this system.
35. Train staff of lower levels in the mean-
ing of new laws and regulations. Train them to
learn from governance experience elsewhere as a
means of raising their own performance to stan-
dard.
Chapter 1 Governance and Management under Decentralization

Governance and Management Issues

Management “Line” Governance “Line”
School 36. Require districts to assess 41. Apply governance guidelines on
level their management and governance School Committees.
skills against their assigned func- 42. Train staff of lower levels to learn
tions from governance experience elsewhere as a
37. Start demand-led skills means of raising their own performance to stan-
upgrading by creating and using dard.
capacity-building facility 43. Train School Committees in assessing
38. Require districts to assess their own schools.
their performance against stan- 44. Train School Committees in finances
dards and start reporting according and personnel management.
to standards, both up the manage- 45. Train School Committees on how to
ment line and horizontally to the receive and use information about how to raise
School Committee educational quality up to standard.
39. Apply models for inter-
acting with School Committee
40. Apply decentralized fi-
nancial, personnel, procurement,
and information systems

27
Education Sector Review Volume 2

Appendix 1.2. List of Interviewees

Experts and Policymakers on Governance and Senior researcher, Indonesian Institute of
Management Issues Sciences (LIPI).Sumarno M.A., Ph.D., Drs.
Vice-Director, School of Graduate Studies,
Asshidiqie, Prof. Dr. Jimly. Faculty of Law, Universitas Negeri Yogyakarta.
Universitas Indonesia. Center for Electoral
Reform. Supriyoko, Prof. Dr. Ki. Majelis Luhur
Taman Siswa. National Education Com..
Azra, Prof. Dr. Azyumardi. Rektor, IAIN
Syarif Hidayatullah. Suyanto, Prof. Rektor, Universitas Negeri
Yogyakarta.
Djemari, Prof. Mardapi. Director, School of
Graduate Studies, Universitas Negeri Tobing, Drs. Jacob. Member of Parliament.
Yogyakarta. Commission A on Constitutional
Ammendments to 1945 Constitution.
Madjid, Prof. Dr. Nurcholish. Rector,
Universitas Paramadina. Lecturer, Post-
graduate Faculty, IAIN Syarif Hidayatullah.

Representatives of Education Boards and of School Committees

We selected key members of Education Boards and School Committees in four rural and four urban
areas, yielding 34 interviewees.The urban districts chosen were Benkulu City and Mataram City
(classified as low income) andYogyakarta City and Banjarmasin City (classified as middle-income).
The rural districts included Wonosobo and Lamongan (classified as low income) and Bekasi and
Gianyar (classified as middle income).

Interviewees from Education Boards/Councils

District/City Name of Respondent Position

Yogyakarta City H.M. Wasul Widyo Pranoto, B.A. Member/Chief, Public

Drs. Asmuni Relations Section
Member, Infrastructure
and Facilities Section
District of Bekasi, H. Hanafi Ali Vice-Chairman
West Java Noupal Al Rasyid Secretary
H. Rimin. Member
District of Gianyar, Drs. I Made Susila Secretary I
Bali I Wayan Sudamia, SH Secretary II
Mataram City, H. Adnan Muchsin, Ssi Chairman
Nusa Tenggara Barat Drs. M. Tajuddin, M.Si Secretary
Bengkulu City Drs. Sutrisno, S.A. Chairman
Djajadi Aliamar, B.A. Vice-Chairman
Drs. Z. Fauzi Hamid Secretary
Banjarmasin City, Drs.H. Sultani Secretary I
South Kalimantan
District of Wonosobo, Central Slamet Rahardjo Budi Chairman
Java Drs. Slamet Witoro Secretary II
District of Lamongan, East Drs. Tsalist Fahami, MM Chairman
Java K.H. Abdul Fatah Vice Chairman
Ir. Suhandoyo, SP Secretary

28
Chapter 1 Governance and Management under Decentralization

Interviewees from School Committees

Name of School Name of Respondent Position

SMU Negeri I, Ir. Sagoro Wedy, MM Chairman

Yogyakarta City Drs. Helly P. Soetjipto, MA Member
SD Negeri Jatimulya 04 Tam- Bambang S. Chairman
bun, Bekasi Mirsod Member
West Java

SLTP Negeri I Gianyar, I Pande Ketut Sutara Chairman

Bali
Chairman
SMU Negeri I Gianyar, Bali I Dewa Ketut Alit Budiana
SD Negeri 13 Ampenan, Drs. Sugiyarno Chairman
Mataram, NTB
SLTP Negeri I Bengkulu H. Sukiman, SE Vice Chairman
Herlina Tobing Secretary
SD Negeri Teluk Dalam 4, H. Iskandar Chairman
Banjar-masin, South Kaliman- Yadi ES Vice Chairman
tan Suratno Secretary
SLTP Negeri I, Leksono, Wo- H. Pudjonartojo Chairman
no-sobo, Central Java Kidjo DH Member
SMK Negeri I Lamongan, H. Gholib Kastoer Chairman
East Java Arifin Secretary

In addition, we interviewed representatives of the Bupati and the Dinas Pendidikan Office in the
Jembrana District.

29
Education Sector Review
Appendix 1.3. Decentralization Case Studies
Case 1. Mexico: broad decentralization
success but a lack of definition and top-
down implementation has led to insufficient
gains in local governance.
Despite erratic policies and political conflicts,
the decentralization of education in Mexico is
on the move. Whereas it does not represent a
complete devolution to the states—having
transferred significantly more management
functions but not full responsibility for cur-
riculum content, academic evaluation, and
quality assessment—the states are assuming a
large measure of influence over education, and
this is getting larger.
[However,] Chapter VII of the General Law of
Education (GLE) provided the basis for creat-
ing Councils of Social Participation in Educa-
tion. These councils were designed to exist at
every level of the education system in a pyra-
mid fashion from the bottom up, with councils
operating in every school, county, and state in
the nation including representatives from each
state council, plus outstanding teachers and
scholars, and other distinguished representa-
tives of society. The GLE stated that parent
associations should not be involved in the de-
tails of school management but instead should
concentrate on larger issues.
The SNTE (teacher’s union) leadership did not
formally oppose the creation of such councils,
but some groups of teacher foresaw the inter-
vention of “extraneous” people in school af-
fairs, which they considered their exclusive
terrain. In their Educational Congress of
1994, foreseeing a threat to weaken the teach-
ers’ monopoly in school management, the
SNTE’s national leadership ruled that at least
half of the members of such councils must be
teachers (Sindicato Nacional de Trabajadores
de la Educación, 1994). Finally, in September
1999, the SEP (the national Ministry of Edu-
cation) organized the national council with
many as members but without defining its
specific functions. So far, the use of councils
as a means of instituting wider participation in
30
Volume 2
educational governance has not been success-
ful.
 From: Ornelas, Carlos. No date.
“The politics of the educational
decentralization in Mexico.” At
http://www1.worldbank.org/educat
ion/globaleducationreform/pdf/orn
elas.pdf.
Case 2. South Africa: minimum standards
and sectoral collusion in teacher manage-
ment has led to unfunded mandates and fis-
cal problems.
[After decentralization], all provinces experi-
enced similar over-spending, in large part be-
cause they were implementing nationally
determined policies. This included the nation-
ally negotiated salary agreement and new poli-
cies in the education, health, and welfare
sectors. Much of this problem was due to the
lack of co-ordination between policymaking
and budgeting, and the rapid pace of decen-
tralization compounded this problem. The
implementation of nationally agreed policies
was not necessarily an unfunded mandate,
however. Such policies (in education, health,
and welfare) were implemented with the full
support of education departments at the pro-
vincial level, who were also involved in de-
veloping the policies.
Sectoral collusion to secure more funds
proved to be a far stronger factor in over-
spending than unfunded mandates. Intergov-
ernmental agencies on education, health, and
welfare developed national policy [especially
on standards] without taking into account
budgetary resources. Many departments
adopted an aggressive policy to address back-
logs in deprived black areas. For instance, in-
equities in teacher-pupil ratios were reduced
between black and white schools. The increase
in personnel expenditure squeezed out expen-
diture in non-personnel inputs like textbooks,
undermining the attainment of the desired out-
puts.
Chapter 1
The national government was forced to inter-
vene. It solved the problem of a lack of co-
ordination by creating joint intergovernmental
forums between the Treasury and the relevant
national line ministries. For example, a com-
mittee was set up comprising the national
Ministers of Finance and Education together
with their counterparts in provinces, and this
met at least twice a year to co-ordinate poli-
cymaking, budgeting, and implementation.
These structures are supported by a range of
large and small technical forums of officials
from national and provincial treasuries and
line function departments. These forums en-
sure that budgets and national policy are
aligned and that provincial departments adhere
to their budgets. It has also reduced the
budget games played in such sectors.
The implementation of these simple but criti-
cal measures helped to turn around provincial
finances dramatically. They ran a R500 mil-
lion surplus in 1998/99 compared to a R5.5
billion deficit a year earlier. Provinces stabi-
lized their personnel expenditures and began
shifting funds towards non-personnel budgets
and the payment of debts. The implementa-
tion of a multi-year budget [MTEF] from 1998
onwards also helped provinces to prepare
more realistic budgets. Provinces have run
surpluses every year since 1998 and had paid
off their debt by the end of the 2000 financial
year. This has put them in a strong position to
focus on the micro reforms necessary to im-
prove the quality of spending in education and
health and on increasing their infrastructure
budgets.
 From: Momoniat, I. No date.
“Fiscal Decentralisation in South
Africa: A Practitioner’s Perspec-
tive,” at
http://www.worldbank.org/wbi/pub
licf-
nance/documents/South%20Africa.
pdf
In 1994, gross inequalities in learner: educator
ratios were also identified as an important ob-
stacle to equity, and plans were made to de-
velop national norms for the provision of
31
Governance and Management under Decentralization
educators to schools. These new national
guidelines specified a learner: educator ratio
of 1:40 in primary schools and 1:35 in secon-
dary schools. However, because decisions
about educator numbers and salaries were
made at national level [in a process led by the
education authorities] while implementation
took place at provincial level [with budgets
determined by financial authorities], these
agreements were often unaffordable at provin-
cial level.
The national process of educator provisioning
was abandoned, and it was decided that each
province would have its own target learner:
educator ratio [with affordability driven from
the budget side determining the number of af-
fordable teachers in a province], but a nation-
ally negotiated post-provisioning model would
guide its application in individual schools.
The attempt at equitable distribution of educa-
tors has not been ruined, however, since pro-
vincial education departments became
responsible for the process. The latest statis-
tics released by the Department of Education
suggest that provinces have moved closer to
each other in terms of learner: educator ratios.
 Lange, M. 1998. “Opening Re-
marks,” Seminar on Democratic
Transformation of Education,”
Konrad Adenauer Foundation Jo-
hannesburg, at
http://www.kas.org.za/Publications
/Semi-
narRports/Democratictransformati
onofeducation/lange.pdf.
Case 3. USA and Japan: School Boards, an
old tradition—but sometimes a controver-
sial one.
USA
From San Francisco to New York City, may-
ors and state legislatures are contesting local
school boards for control over classrooms.
It's a flat-out challenge to one of the deepest
traditions in American public education:
schools being run by boards that are anchored
in the community.
Education Sector Review
The United States has long had the strongest
system of local control in the industrialized
world, and critics of the current takeover trend
worry that communities - and especially racial
minorities - are being disenfranchised.
But pressure for change, driven by sagging
student achievement and education's growing
role in state budgets, is formidable. Some 23
states have passed laws authorizing state or
city takeovers of school districts in crisis.
"Mayoral control is a new phenomenon in
troubled urban school systems, and the early
signs in the cities that have moved this way
look promising enough for others to follow
suit," says Ted Sanders, president of the Den-
ver-based Education Commission of the
States.
Last week, San Francisco Mayor Willie
Brown called for returning that city to a
mayor-appointed board, after 30 years with an
elected board. The change would result in
more qualified people on the board and im-
provements in public schools, he said.
Meanwhile, New York City's new mayor, Mi-
chael Bloomberg, wants to abandon an ap-
pointed board in favor of a commissioner who
reports directly to the mayor. And last month,
New York Gov. George Pataki (R) called for
putting mayors in charge of schools in the
state's six largest cities, including Albany and
New York City.
But current moves to center more control on
City Hall are already generating a backlash
from critics. They argue that the shift from
elected boards will distance poor and minority
voters from decisionmaking.
Cleveland - now starting a $1 billion school-
construction project - is gearing up for a vote
this fall on whether to return to an elected
school board after three years of control by
City Hall. Mishandling of a $60 million bond
issue was one reason the state turned control
of schools over to the mayor in 1998.
32
Volume 2
While both mayoral candidates in last year's
election campaigned to keep control of the
schools in City Hall, opinion polls show a ma-
jority of voters want to go back to an elected
board.
Indeed, the US tradition of local control runs
deep. Across the country, some 15,000 local
school boards handle everything from repair-
ing gutters to setting educational goals. Of the
95,000 people on these boards, 96 percent are
elected.
That system is now under siege in many urban
centers. Early takeovers in cities like Boston
(1991), Chicago (1995), Cleveland (1998),
and Detroit (1999) were prompted by a melt-
down of school finances or governance. In
Baltimore (1993) and Philadelphia (2001), the
state engineered the takeovers.
In some cases, elected school boards con-
spicuously mismanaged funds - overspending
credit cards or bungling millions in funding
for school construction. In others, petty
squabbles and erratic behavior spilled out onto
the front pages of local newspapers, undermin-
ing public confidence in the capacity of local
boards.
More recently, pressure for change is coming
down to the central issue of student achieve-
ment.
Most students in urban public schools aren't
doing well. And with new state and federal
testing regimes, such failures are becoming
more and more conspicuous…
"The basic problem is that school boards are a
19th century idea that made sense when most
communities were small and self-governing,
and people tended to grow up and live and die
in the same place.... That has all changed
now," says Chester Finn, president of the
Thomas B. Fordham Foundation and an ad-
viser to GOP presidents…
 From Chaddock, G.R. 2002.
“Mayors, States, Push School
Boards Aside,” Christian Science
Chapter 1
Monitor, February 26, 2002 at
http://www.csmonitor.com/2002/0
226/p01s01-ussc.html
Japan: School Boards—an unfinished agenda
Editorial: School Boards Can Work
The forum, properly used, can inspire educa-
tion. Many boards of education seem to be lit-
tle more than a pipeline for carrying
instructions from the education and science
ministry to the schools…
Many boards of education seem to be little
more than a pipeline for carrying instructions
from the education and science ministry to the
schools. Education board secretariat officials
in many municipalities set the agenda and
education board members are just figureheads.
It is not surprising that some critics say boards
of education have no value. Some even say
they should be eliminated and the mayor
should take over the administration of public
education. They also say that voters should
determine whether the mayor has performed
satisfactorily.
Those critics have a point. If the mayor ap-
points teachers on political grounds, however,
it would cause confusion in schools. A mayor
should instead challenge and make better use
of a board of education.
But some points require extra attention. Mem-
bers of a board of education must be drawn
from a wide spectrum, including parents, edu-
cation specialists, people in business and
young people. Those with an interest in edu-
cation should be drawn upon to discuss their
perspectives and solicit their suggestions.
It is also useful to have nonprofit organiza-
tions as full-time assistants to the board mem-
bers and get them involved in policymaking.
And it is important to have cooperation among
members of boards of education in neighbor-
ing communities. The annual meeting of vil-
33
Governance and Management under Decentralization
lage school superintendents is an example. If
boards of education in neighboring villages
form liaison committees and share staff and
budgets, they would find it easier to pursue
bold policies.
The concept of a board of education was origi-
nally an organization to solicit opinions from
those in a community with children in school
and an interest in education. If parents and
residents use the forum wisely, the board of
education can continue to be very useful.
 From The Asahi Shimbun, Nov.
26, 2002), at:
http://www.asahi.com/english/op-
ed/K2002112700673.html.
Case 4. Brazil, Spain: Decentralization and
good management information—difficult
and problematic but possible with effort
and partnership.
Brazil
The implementation of education reforms in
Brazil, where education systems are character-
ized by political-institutional decentralization,
necessarily requires sound mechanisms for
monitoring and following-up on ongoing ac-
tions and policies. Such managerial instru-
ments help observe how reforms are
progressing and, more importantly, help iden-
tify the positive points and those needing ad-
justments. Those mechanisms also provide
unquestionable social gains that may be meas-
ured both in terms of greater efficiency and ef-
fectiveness, and in terms of the desirable
assurance of transparency and equity in gov-
ernmental programs.
The use of information in educational man-
agement complies, therefore, with two basic
principles of democracy: accountability -
through the wide dissemination of results ob-
tained in surveys and assessments - and per-
manent social control. Last, but not least,
educational evaluation and information sys-
tems play a strategic role in the planning and
prospective design of scenarios, for they con-
tribute in no small way to the formulation of
Education Sector Review
new policies and programs that may provide
answers for new trends. In order to fulfill
these multiple purposes, information systems
must count on uniform and scientifically based
methodologies and survey instruments, up-
dated and reliable databases, as well as agile
and precise dissemination mechanisms.
[But] until 1995, Brazilian education data
were outdated and unsystematic. Since there
was no recent information available, directing
government policies in that area was a chal-
lenge as difficult as flying a plane in the midst
of a storm having no guiding instrument on
board. Not only did the lack of updated in-
formation jeopardize the decisionmaking
process, but it also caused a huge waste in the
allocation of funds. Furthermore, in the ab-
sence of a national standard system of infor-
mation and indicators, several states had their
own data gathering and processing systems,
not compatible to each other. For this very
reason Brazil could not even provide interna-
tional organizations with consistent data on
education.
By the beginning of 1995, the latest school
census available dated back to 1989, and the
last finished survey was that of 1991. The in-
formation available was, therefore, inadequate
to provide support for the design of actions di-
rected at improving the education system.
From that year on, the Brazilian educational
information system has gradually undergone a
complete reformulation, having acquired an
integrated, decentralized and comprehensive
structure, which includes now all levels and
types, from early childhood to tertiary educa-
tion and more advanced programs.
This process was based on government guide-
lines for the creation of evaluation mecha-
nisms to monitor the country's education
systems. As a matter of fact, nowadays all
programs and projects carried out by the Min-
istry of Education are based on diagnoses and
recommendations derived from statistical sur-
veys and assessments on basic and higher edu-
cation.
34
Volume 2
Several factors have contributed to the refor-
mulation of the educational evaluation, statis-
tics and indicators systems in Brazil. In the
domestic context, the strong leadership of the
Ministry of Education should be pointed out,
driving this initiative forward in constant part-
nership with sub-national authorities as well as
with representatives of the education sector.
Growing public opinion support to the sys-
tematic evaluations of the educational institu-
tions has also been an extremely relevant
factor. In the international context, the impor-
tance of multilateral cooperation should also
be stressed, for the purposes of acquiring
knowledge, capacity-building, sharing experi-
ences and comparisons with other countries.
 Gumaraes de Castro, M.H. 2000.
“Role and Value of International
Education Indicators For National
Policy Development.” Fourth
General Assembly of the OECD
Education Indicators Programme
(INES). 11 - 13 September - To-
kyo, Japan, at:
http://www.inep.gov.br/download/i
nterna-
cional/idioma/Role%20and%20val
ue%20of%20international%20indi
ca-
tors%20for%20national%20policy
%20development.pdf.
Spain
As the decentralization process unfolded in the
1980s, the country needed a planning mecha-
nism that would serve to coordinate the educa-
tional policies and programs being developed
and executed by the MEC and the decentral-
ized autonomous communities (de jure). An
early experience signaled why such a coordi-
nating mechanism was necessary; soon after
the decentralization process began the capacity
to gather and reproduce nation-wide educa-
tional statistics was lost. Various regions had
begun gathering their own data using formats
that could not be aggregated at the national
level.
Chapter 1
The Education Law of 1985 created the Con-
ference of Counselors, with the Minister of
Education and the autonomous community
Counselors (chief educational officers) of the
seven already decentralized regions as mem-
bers. Much of the work of the Conference
(which meets at least once a year), is carried
out by five technical subcommittees each fo-
cusing on a specific issue (for example, per-
sonnel, curriculum, and statistics).
[It has been pointed out that] de facto the Con-
ference is an instrument of cooperation and
not coordination because none of the decen-
tralized regions is obligated to carry out the
decisions of the Conference when they believe
their own statutes of autonomy are being vio-
lated. Rather, the Conference operates as a
mechanism that brings together the chief edu-
cators of the decentralized regions and the
Ministry of Education and Science to discuss
common problems and to search for possible
avenues of collective action. Interviews with
observers of and participants in the Confer-
ence of Counselors reveals two underlying
problems that limit its effectiveness as a major
integrating force. The first problem is a ge-
neric distrust on the part of several autono-
mous communities that the Conference may
be used by the MEC to control the actions of
the decentralized regions. The second prob-
lem is that even though issues are brought to
the Conference as technical problems, the pro-
posed solutions tend to have heavy political
overtones. After all, the Minister and the
Counselors sitting around the table all re-
ceived their appointments as representatives of
a particular political party, thus political agen-
das are never far from the surface. Having
said that, it should be noted that at times the
Conference is capable of reaching important
agreements and carrying out complex actions.
 From Hanson, M. 2000. “Democ-
ratization and Educational Decen-
tralization in Spain: A Twenty
Year Struggle for Reform.” Coun-
try Studies. Education Reform and
Management Publication Series.
Vol. 1, No. 3, June 2000, at:
http://www1.worldbank.org/educat
35
Governance and Management under Decentralization
ion/globaleducationreform/pdf/han
son.pdf
Case 5. The United States: Data compli-
ance in a large federal republic.
The United States is the second largest federal
republic in the world after India. Compared to
unitary republics, the federal level in the US
has relatively little control over education and
relatively little power to enforce or mandate
standards. It provides only a small amount of
funding, historically considerably under 10
percent of total education funding in the coun-
try. However, this does not mean that it is im-
possible to develop some uniformity of data at
the federal level. (Description of these data
can be found at the Web site on the Common
Core of Data—CDD—of the National Center
for Education Statistics—NCES,
http://nces.ed.gov/ccd/aboutCCD.asp.) And,
given that control even in unitary republics
may be more illusory than real (generating
only the illusion of compliance), some of the
lessons from the US might be of interest, par-
ticularly to large, unitary republics undergoing
serious decentralization (to the degree that
some call them quasi-federal), such as South
Africa or Indonesia.
In the US, uniformity and compliance by
states in the submission of data to the federal
level has been accomplished via a variety of
tactics.
x Least important is any form of man-
date or obligation: these are the least-
used means of ensuring compliance
and uniformity.
x The federal level does rely on the fact
that each state (generally, though it
varies) does have power to ensure
compliance from schools. Thus, the
federal level is mostly concerned with
communicating with 50 states, not
some 18,000 districts, or hundreds of
thousands of schools.
x Some compliance is required in feder-
ally funded programs; standard data
object definitions are published. But
Education Sector Review
most of the data gathered at federal
level does not fall under this category.
x Another incentive is that, as the qual-
ity of data have improved over time,
the federal government does use the
data in initial planning and indicative
resource allocation. The states know
this, and thus there is an incentive to
improve.
x A major incentive is maintenance of
close professional and personal rela-
tions between the data groups at fed-
eral level and each of the states.
x There are technical statistical working
groups that are cooperative in nature,
but exist on a permanent basis. These
groups generate awareness of the need
for standards, agree on definitions,
etc. The most important example is
the National Forum on Education Sta-
tistics (http://nces.ed.gov/forum/),
which brings together public sector of-
ficials from education and other re-
lated sectors, but also from teacher
unions, and others concerned with
education. The forum is funded by
the federal government, which gener-
ates sustainability, but is not a gov-
ernment office. Importantly, the
forum provides training, guidebooks
on definitions, etc. It meets twice per
year, though some sub-committees
meet more often.
36
Volume 2
x The federal level tries to make it as
easy as possible to submit data, ac-
cepting a wide variety of computer
formats.
x The system has evolved. Over the
past 15 years, the federal level has
emphasized networking, the build-up
of professional relations, allowing par-
ticular States to show off their best
practices to the other states, etc. This
has been a great help.
In short, a decentralized system can assure a
considerable degree of data compliance. The
key lessons are that it takes time, professional-
ism, nurturing of relationships, and, of course,
some sustainable budgetary allocations to en-
sure that the effort does not flag once it starts.
 Compiled by Luis Crouch
from personal communica-
tions with the CDD and
NCES.
 Chapter 1
Appendix 1.4. Citizen Perception and Educational Reality: Insights from
the Governance and Decentralization Survey
The Governance and Decentralization Survey
(GDS) was a random sample survey carried out
in 2002 in a large number of Indonesian dis-
tricts. It asked both citizens and officials for
their opinions about the quality of various ser-
vices, including the effects of decentralization,
their perceptions of corruption, and other impor-
tant issues related to the governance and man-
agement of service delivery. Most of the
questions elicited subjective opinions based on a
scale. A few questions asked for objective in-
formation such as the number of days required
by delivery systems (for example, education) to
perform a certain task (for example, to promote
a teacher).
Based on the results of the survey, which col-
lected data on purely subjective opinions, citi-
zens appear to be fairly happy with their
education services and seem to believe that these
services have improved since decentralization.
This could have two quite opposite interpreta-
tions. First, if there was some sort of objective
correlate that suggested citizens have reasonably
high standards and are good judges of quality,
then this result would be a positive thing. Fur-
ther improvements would always be possible, of
course. However, a second, more negative in-
terpretation would be that if there are some ob-
jective indications, even within the survey itself,
that services leave a good deal to be desired,
then the fact that citizens appear somewhat
complacent makes the task of improving educa-
tion seem even harder than it might otherwise
be. This is because in addition to delivering on
improvements, it may be necessary to overcome
existing complacency. This second interpreta-
tion appears the most likely for two reasons.
First, when citizens were asked about their per-
ception regarding education, there is some evi-
dence that their range of response was very
narrow. Citizens seem to have responded in a
tight and marginally optimistic fashion, without
much deviation towards the negative or the posi-
tive.
37
Governance and Management under Decentralization
Second, when the few objective indicators of
quality of services that could be found were ana-
lyzed, it was found that service standards are ac-
tually fairly poor—schools claim it takes some
seven months to fulfill book orders, for example.
Furthermore, opinion from school-level stake-
holders (principals) about these more objective
service standards varies a great deal more (some
10 times more) among districts than citizen’s
perceptions of quality, confirming that citizens
tend to have a range of opinions about quality
that is narrower than more objective indicators
or that they simply responded positively out of
politeness or because they thought this may be
what the enumerator wanted to hear. There is
also evidence that citizens place more value on
physical and business infrastructure than on
education, confirming the suggestion that per-
haps their standards with regard to education
might not be very high.
Third, when “objective” observers were asked
about their perceptions of corruption and citi-
zens’ general complaints, education regularly
fared worse than other sectors.
Finally, less than a third of districts seemed to
have had norms regarding education, at least in
the opinion of DPRD members, at the time the
survey was taken. All of these findings taken
together suggest that improving governance and
management in the sector will require not just
increasing citizens’ capacity and incentives to
press for better services but also the harder (and
chronologically prior) tasks of a) developing
demanding but reasonable standards and em-
bodying them in norms, regulations, or guide-
lines, b) ensuring that citizens know what
standards they have a right to expect, and c) en-
suring that, either through some form of man-
dates or moral persuasion and dialogue, local
areas give education the degree of local prioriti-
zation it deserves. These tasks are more in-
volved—conceptually—than those involved
with simply training citizens to press for better
services. They also, as noted, need to be tackled
before raising citizens’ expectations, both logi-
Education Sector Review
cally and chronologically. However, they are
not much more labor-intensive.
Basic Facts about the Survey
The Governance and Decentralization Survey
(GDS) carried out by the Center for Population
and Policy Studies (CPPS) at the University of
Gajah Mada, with World Bank funding, was an
opinion survey that was applied to many levels
of Indonesian society.9 The survey was carried
out in 2002. The survey has the following rele-
vant characteristics:
1. It is largely an opinion survey, based on
scales, with only a few objective indicators
or judgments by enumerators trained to
evaluate a process or situation. The lack of
objective measurements (or judgment of
processes by trained enumerators) makes it
difficult to assess the objective quality of
governance. It also makes it difficult to cor-
roborate opinions by seeing whether they are
correlated with the objective measurements.
Thus, the absolute value of the opinions is
not of very much interest. However, opin-
ions can be compared with each other a)
across sectors and issues, to see whether
opinion about governance in some sectors or
issues is better or worse than in others and
b) for a given sector or issue across localities
and actors to see whether these opinions cor-
relate with each other.
2. The following actors—numbers of each in
the database are shown in parentheses—
were interviewed:
a. Officials in Bupati/Walikota’s office
and other general local government
(741)
b. Members of regional legislature or
DPRD (567)
c. Practitioners in the justice system—
judges and district attorneys (259)
9
For a fuller description of the survey see:
http://lnweb18.worldbank.org/eap/eap.nsf/2500ec5f1
a2d9bad852568a3006f557d/f342ce243175816d4725
6c1a0015a2a0?OpenDocument.
38
Volume 2
d. Officers of the Dinas Kesehatan
(141)
e. Officers of the Dinas Pendidikan
(141)
f. Members of NGOs (563)
g. Members of the media (422)
h. Lawyers (133)
i. Officers of Puskesmas
j. Officers of schools (857)
k. Citizens or households (8579)
l. Representatives of private sector
(562)
3. The list of districts where the overall survey
was carried out is shown in Table 13 (This
table is shown at the end of this appendix as
it is quite long.) Sixty households were in-
terviewed in each district. (In one or two of
these districts both the kota and the kabu-
paten were sampled, for a total of 120 inter-
views.) It would be tedious to show the
geographical distribution of every type of
respondent, so only the list of districts is
shown.
Initial Results and Puzzles
A logical place to begin, given the aim of this
appendix, is to see what the most “basic” or “fi-
nal” respondents, namely parents and citizens
think about the quality of services and govern-
ance of the education sector, both at present and
over the past few years.
The following observations can be made from
the survey. First, the proportions of citizens
who thought, at the time of the survey, that ser-
vices were at 3 (or 4) or better on a scale of 1 to
5 (where 5 is best) is as shown in Table 1.
Given the standard errors, differences between
proportions of more than .015 are generally sig-
nificant at the 5 percent level. The data have
been sorted from the “worst” service to the
“best.”
Chapter 1 Governance and Management under Decentralization

Table 1. Proportion of citizens scoring quality of services

as “medium” or better (3 or higher on a 1 to 5 scale)10
Proportion scoring the service Proportion scoring the service Std Error of
Service 3 or better 4 or better Column 1
Police 0.722 0.324 0.005
Head of Sub-district office 0.844 0.488 0.004
Public Senior High School 0.859 0.574 0.004
Doctor of Puskesmas 0.878 0.542 0.004
Village Midwife 0.884 0.590 0.003
Public Junior High School 0.886 0.592 0.003
Public Elementary School 0.905 0.599 0.003
Puskesmas 0.915 0.508 0.003
Posyandu 0.927 0.649 0.003
Head of Kelurahan/village
Office 0.931 0.575 0.003

Generally, education falls in the middle of the
range. A very large majority of citizens seems
to think services are either “ok” (3) or better,
with the numbers thinking services are “better
than ok” (4 or higher) being a small majority
(except for in the police and sub-district cate-
gories). It would be hard to argue that in static
terms, and in terms of subjective opinion, edu-
cation services are failing, either compared to
other services or in purely subjective absolute
terms.
Second, citizens seem to think not only that
things are not bad, but also that services ap-
pear to be improving under decentralization, if
one goes just by citizens’ subjective opinions,
as shown in Table 2.
A majority of citizens think that services
have not changed, but far more think that
services have gotten better than think they
have gotten worse (the middle category of “no
change” is the rest). Again, differences be-
tween services of more than about 0.015 in the
“better” column and of more than 0.003 in the
“worse” column are statistically significant. It
is true that the largest proportion of citizens
who think services have gotten worse is in
education, but 6.1 percent, while statistically
significantly different from the value for the
other services, is not striking from a social or
economic point of view. It is interesting to
note that, regarding education, fewer citizens
are in the middle and fewer are without an
opinion.

Table 2. Proportion of citizens who think services have Third, when citizens were asked to say
gotten better or worse since decentralization whether they were happy with particular
Don’t aspects of education, on average, across
Better Worse
Service Know most sub-aspects, about 80 percent said
School 0.396 0.061 0.045 they were happy, and there is not much
Health 0.403 0.030 0.066 variability across sub-aspects.11 This is
Village 0.397 0.026 0.032 shown in Table 3.
Sub-District 0.318 0.017 0.142
District 0.264 0.021 0.298 All this presents a puzzle. The experts
seem to think that the Indonesian educa-
tion sector is in trouble, yet citizens appear not
to think so. One possible explanation is that

10 11
The source for all tables is our analysis of the The phrasing of the question was altered between
GDS itself. The source for each individual table is “are you satisfied” and “are you unhappy.” The
therefore not listed. percentages were roughly the same in either case.

39
Education Sector Review
the experts are wrong, that they are rent-
seeking in promoting a sense that education
has problems (because if they promote a sense
of crisis, there will be a higher demand for ex-
pert services). This may mean that the situa-
tion is in fact truly better than subjective
Table 3. Percentage of citizens satisfied
with various sub-aspects of education
School fees 71
Uniform prices 78
School achievement 82
School discipline 87
School learning process 86
PTA management 83
Extra-curricular activities 81
opinions would suggest or there may be at
least two other explanations.
One possible explanation is that citizens told
the enumerators what they thought they
wanted to hear and thus responded fairly posi-
tively to most questions even though they may
have thought otherwise, or citizens may sim-
ply have had very low expectations. If one
takes into account noise and randomness, then
there is some variation around a generally
positive, but somehow “standardized ok” out-
look. The lack of many objective correlates to
the opinion questions makes it hard to assess
whether this is the case.
Another possible explanation is that citizens
genuinely perceived things to be going fairly
well in education, but there was a gap between
what they perceived and what is in the na-
tional interest—in other words, the survey as-
sessed individual or local satisfaction rather
than collective need. Since the effects of edu-
cation are perhaps 50 percent external to the
family and to a considerable degree external to
a village, it makes sense that villagers would
tend to under-invest in education and/or over-
estimate the degree to which it is provided at a
“good-enough” level compared to the national
need.
If the first explanation is true, then citizens
need to be educated to have higher expecta-
tions. However, their expectation must also be
40
Volume 2
technically reasonable. Thus, this suggests a)
the need not only for School Committees and
other citizen groups to articulate demands and
hold service providers to account but also for
ambitious but reasonable standards of per-
formance and b) citizens to realize what stan-
dards they have a right to expect.
If the second explanation is true, this means
that parents and communities will tend to un-
der-invest in education, which means that cen-
tral budgetary pressure of some sort (some
earmarking or even mandates), as well as
training and moral persuasion, will be neces-
sary to ensure that citizens recognize the na-
tion’s needs as well as their own. Again, this
is likely to be a difficult task. We now turn to
the task of sorting out whether these two hy-
potheses might be true.
Sorting out the Puzzle
The first hypothesis, that there is some bias to
the positive middle, can be tested in at least
one simple way. We took all the responses to
the question on the degree of happiness with a
variety of services (the question underlying
Table 2). The range of judgment as to the
quality of services can go from 1 to 5, with 5
being the best. We averaged the valid re-
sponses for all services in each district. We
then ranked all of the 142 districts. The dis-
trict falling at the boundary of the 1st and 2nd
quintiles (the average of the 35th and 36th) had
an average of 3.51. The district falling at the
boundary of the 4th and 5th quintiles (the aver-
age of the 106th and 107th) had an average of
3.69. The very worst district of the 142 had an
average rating of 3.23, nearly half-way be-
tween “fair” and “good,” and the very best
only 3.95, not quite “good.” The total range
from 3.23 to 3.95 is 0.72 or only 18 percent of
the total range of variation possible (4 points),
and the inter-quartile range is only 4.7 percent
of the total possible range of variation.
All this strongly suggests a pre-disposition to
respond with a bias towards the slightly posi-
tive above neutral. It is true that averaging out
all services produces an artificial uniformity
bias that may not be present in the responses.
Chapter 1
Table 4. Time it takes to perform certain tasks (in months)
Task
Changing the status of a position (promoting a position)
Promoting a teacher
Approving a student movement
Fulfilling book procurement proposal of the school
Thus, taking specific services one at a time,
the actual range of total variation between the
worst and best district is, on average, 24 per-
cent of the possible range of variation, and the
inter-quartile range, service by service, is 6.3
percent of the possible range. Finally, the
worst service, policing, got an average rating
of 3.1, and the best, Posyandu, got an average
of 3.8, with the difference between the two be-
ing 16 percent of the possible range. This
confirmed the notion of a restricted range of
variation that sits right above the average.
The idea that this restricted range might be
“natural” still has to be dealt with—there is,
after all, no reason why citizens’ ratings would
have to be uniformly distributed or distributed
in any particular way. If the quality of ser-
vices really is very tightly controlled by gov-
ernment and kept within a certain range, it is
entirely possible that the citizens’ reactions
might simply reflect this fact. We will return
to this when we have a way to test it.
Another way to test the notion of positive bias
due to a lack of objective scaling is that there
were at least some governance and manage-
ment questions that were a) based on an objec-
tive scale (though not independently
measured) and b) asked of more than one type
of respondent. There was a question about
how long it took the Dinas Pendidikan office
to process a certain type of action. The same
question was asked of the Dinas Pendidikan
Second, the difference in perspective between
the Dinas Pendidikan and the schools is clear
and strong: 44 percent on average. The one
exception to this divergence of perception is
the time it took to approve a student move-
ment. Schools’ estimates of the time required
for certain actions is much longer than those
of officials.
41
Governance and Management under Decentralization
Dinas Pen- Percentage
didikan School difference
3.0 5.1 68%
3.7 5.8 58%
2.0 2.2 9%
5.7 7.4 30%
and of the schools. The services concerned
were:
1. Changing the status of a position
(promoting a position)
2. Promoting a teacher
3. Approving a student movement
4. Fulfilling the school’s book procure-
ment proposal.
The responses were in ranges (1 to 3 months,
4 to 7, etc.). Giving the middle value of the
range to each range, the approximate time in
months taken to carry out each of these tasks
from the points of view of the Dinas Pendidi-
kan and the school is shown in Table 4.
This table is significant for various reasons.
First, taking 3.7, or even 3 months, to promote
a teacher, or taking 5.7, or even 5 months to
fulfill a procurement order, is a very low stan-
dard, and yet this is the perception of the Di-
nas Pendidikan. The perception of the school
is that the tasks take, on average, some 30 to
70 percent longer (44 percent on average), as
much as 7 months to fulfill book procurement
orders or 5 to 6 months to get a teacher pro-
moted. One has to remember that “2” in the
table above really means 1 to 3 (months), so
one has to interpret the results cautiously.
Nonetheless, these are poor performance lev-
els. When this is juxtaposed with parental
opinion, then, parents seem to have a bias to-
wards the positive or to have low expectations.
We can now turn to the issue of whether the
range of citizens’ rating of services might be
“natural,” in other words, might reflect the
true range of objective variation in quality. To
check this, we assessed the coefficient of
variation between district averages of the time
it takes to perform various services as above.
These results are shown in Table 5.
 Education Sector Review Volume 2

Table 5. Coefficient of inter-district variation

in time it takes to perform certain tasks and in citizen rating of various services
Dinas Pen-
didikan School per- Citizen per-
Task perception ception ception
Changing the status of a position (promoting a position) 0.68 0.38 NA
Promoting a teacher 0.88 0.40 NA
Approving a student movement 0 0.12 NA
Fulfilling book procurement proposal of the school 0.77 0.42 NA
Average across all tasks 0.46 0.24 NA
Citizen rating of basic education services NA NA 0.042

Interestingly, the averages as perceived by the
Dinas Pendidikan are wider even than those
perceived by the schools. However, this is
due to the fact that within many districts the
Dinas Pendidikan officials answered simply
by choosing the lowest possible level (the
range 1-3). A few, however, appear to have
admitted that things take longer. This yielded
a wide range—a range greater than that re-
ported by schools, which would otherwise
seem unlikely. The hypothesis suggests itself
that perhaps Dinas officers have been exag-
gerating at the low end. In any case, it is clear
that citizens’ range of expressed evaluation of
quality is much more restricted—by about
four-fifths—than the variation in this one ob-
jective indicator of quality of services as re-
ported by the schools or—by nine-tenths—by
the Dinas Pendidikan.
This strongly suggests that citizens’ range of
perceptions of service quality is much more
limited than the “real” range of quality as de-
noted by officials’ reported range of variation
in a few objective indicators of service quality.
Another way of assessing whether citizens are
“right” is to assess the correlation between
citizens’ opinion on the subjective scale and
the opinions of both Dinas Pendidikan offi-
cials and school principals on an objective
measure of the time it takes to perform tasks.
Some simple correlations between citizens’
opinions on various services were added as a
benchmark to allow us to judge whether citi-
zens’ opinions, themselves, might be mere
noise. The results are shown in Table 6.
Note that citizen’s opinions do not seem to be
mere noise. Opinions on the quality of differ-
ent levels of schooling are highly correlated to
each other and are highly correlated to the
opinions of village heads on educational qual-
ity (last row, third panel of the table).

While citizens’ opinions may not be mere

Table 6. Simple correlations between household opinions on school quality scale and officials’ opinions on
time it takes to carry out basic tasks for schools
Variables Correlation
Dinas Pendidikan, Schools Opinions on Task Time 0.23
Households’ Opinion on Primary Schools, Dinas Pendidikan Opinion on Task Time 0.05
Households’ Opinion on Primary Schools, Schools’ Opinion on Task Time -0.08
Households’ Opinion on Junior Secondary Schools’, Dinas Pendidikan Opinion on Task Time 0.03
Households’ Opinion on Junior Secondary Schools’, Schools Opinion on Task Time -0.10
Households’ Opinion on Senior Secondary Schools’, Dinas Pendidikan Opinion on Task Time -0.02
Households’ Opinion on Senior Secondary Schools’, Schools Opinion on Task Time -0.07
Households’ Opinion on Primary Schools and Opinion on Junior Secondary Schools 0.88
Households’ Opinion on Primary Schools and Opinion Senior Secondary Schools 0.86
Households’ Opinion on Junior Secondary and Opinion Senior Secondary Schools 0.94
Households’ Opinion on Primary Education and Opinion on Head of Village 0.74

42
Chapter 1 Governance and Management under Decentralization

noise, they are not very correlated with offi- also interesting that education is listed fourth
cials’ opinions regarding the time it takes to but a fairly distant fourth: the drop from third
perform certain tasks. This suggests that one to fourth place is from 18 to 9 percent. This
should be cautious when using task perform- suggests, but only vaguely, that citizens might
ance time as a measure of quality or taking be thinking of education in terms of its private
subjective quality perceptions too seriously. and local returns and that therefore they tend
to put a relatively low priority on education.
Interestingly, while the correlation between Improved health services are also given a rela-
the Dinas Pendidikan officials’ and the school tively low priority. It is likely that here too
principals’ opinion on task time is statistically citizens tend to think not so much about public
positive, 0.23 is low in substantive terms. health measures as about measures that apply
Our second hypothesis is that parents’ or citi- to themselves as individuals or perhaps as a
village.
Table 7. Investment priorities of citizens upon receipt of large
fiscal windfall for their municipality
Poverty alleviation 23% What Do More “Objective”
Local physical development (means/ infrastructure) 19% Observers Say?
Increasing existing business capital 18% One way to assess relative qual-
Improving education service quality 9% ity of services, even without ob-
Agricultural development 7% jective measurements, is to see
Other 5% what other “objective” observers
Improving health service quality 5% (other than parents since, as we
Improving other public service quality 4% have seen, their range of reactions
Distributed to the people 4% seems biased towards the posi-
Financing manpower intensive projects 2% tive) might have to say. NGOs
Developing industrial factories 2% are not likely to be truly objec-
Increasing salary 0% tive, in that NGOs, as is the case
Increasing the number of staff 0% with most policy and service de-
livery analysts and advocates,
zens’ opinions reflect a private or local view presumably benefit from the maintenance of a
of education that naturally tends to under- perception that problems and crises exist.
estimate its importance and thus overestimate (However, it is hard to imagine reasons why
the degree to which delivery is sufficient or of they would tend to be more alarmist about one
adequate quality. sector than another; it would seem logical that
they would be about equally biased in all ar-
One possible way to test this is to assess the eas.) The proportion of NGO respondents
degree to which citizens would want to invest who said that in each of the areas shown there
in education as opposed to other items if their were few or no complaints against local ser-
municipality were to receive a fiscal windfall. vice providers is shown in Table 8.
The results are not an uncommon local priori-
tization: invest in economic assets that do
Table 8. Proportion of NGO respondents who report no com-
not move. The results are as shown in
plaints or hardly any complaints, by sector or office
Table 7.
Program and project development and implementation 0.45
Education service 0.48
The top responses, if taken together,
Health services 0.54
suggest that citizens tend to want to in-
vest in activities of fairly direct economic Regulation of informal economy 0.61
benefit and that apply to fixed assets. Land or building disputes 0.64
Notably, interest in direct investment in Human rights violations 0.65
work schemes or in investment projects Discipline violations in public service 0.68
Labor conflict 0.77
appears not to be high. In any case, it is

43
Education Sector Review Volume 2

The only area “worse” than education appears Table 10. Proportion of DPRD members or offi-
to be general program and project develop- cials who reported no complaints, by sector
ment. All services whose low-complaint pro- Education 0.19
portions are statistically different from Program and project development 0.21
education at the 5 percent level are shown in Health 0.25
italics. The number of low complaints in the Land/building certification 0.37
area of program and project development is Identity card 0.61
not statistically different from education. Amount of land/building tax 0.66
Thus, education is, in a sense, the sector
against which there are most complaints or is Again, education is at the bottom and indistin-
equivalent to the worst. guishably so from program and project devel-
opment. Note that the perceptions on this
It may well be that there are more complaints score are similar to NGO perceptions. And, it
against education simply because this is the is noteworthy how different these numbers are
social service that touches most people on a from citizens’ own responses about problems
daily basis. This cannot be tested. and levels of satisfaction. The same idea, with
some refinement, is shown in Table 11. The
To look at this issue further, we narrowed the results are the same, placing education at the
focus of management or governance com- bottom.
plaints down to the issue of corruption. The Table 11. Proportion of DPRD members
results are shown in Table 9. Sectors statisti- or officials who report few or very few
cally different from education at the 5 percent complaints (within those who report some
level are shown in italics. complaints), by sector
Education 0.23
Table 9. Proportion of NGO respondents who reported
low or very low levels of corruption, by sector or office Program and project development 0.24
Health 0.27
Head of District Office 0.23
Land/building certification 0.32
Local Parliament 0.23
Identity card 0.39
Land Certification Agency 0.21
Amount of land/building tax 0.41
Education Department 0.34
Health Department 0.34
Sub-district 0.4 Does Regulation Exist?
Village 0.46 The DPRD members were asked whether
regulation exists, for some key areas and
The absolute numbers above are of some in- their opinion of what regulation does exist.
terest: if 34 percent of the respondents were The results are shown in Table 12.
reporting little or no corruption, then 66 per-
cent were reporting some or more. This has This is a Table 12. Proportion of DRPD
positive implications for the drive towards de- somewhat ob- respondents saying regulation ex-
ists, by area
centralization below the district level, as advo- jective meas-
cated in the Education Act, as the village level urement, and it Poverty alleviation 0.1
is seen as the least corrupt. is of some Education 0.28
concern that Health 0.53
Similarly, whereas the DPRD might be biased only 28 per- KKN 0.05
in some general direction, it is hard to hy- cent of re-
pothesize that they would have particularly spondents seem to believe that the education
strong sectoral biases. Thus, their perception sector at the local level has been regulated.
of citizens’ complaints is of interest. This is This could be mere perception, but nonethe-
shown in Table 10. less it is the perception of the regional legisla-
ture, so it should be regarded as an important
issue.

44
Chapter 1 Governance and Management under Decentralization

Table 13 Districts Sampled

Alor, Nusa Tenggara Timar Ciamis, Jawa Barat
Asahan, Sumatera Utara Cilacap, Jawa Tengah
Badung, Bali Cirebon, Jawa Barat
Balikpapan, Kalimantan Timur Dairi, Sumatera Utara
Bandung, Jawa Barat Denpasar, Bali
Banggai Kepulauan, Sulawesi Tengah Depok, Jawa Barat
Bangkalan, Jawa Timar Donggala, Sulawesi Tengah
Banjar, Kalimantan Selatan Dumai, Riau
Banjarbaru, Kalimantan Selatan Flores Timur, Nusa Tenggara Timar
Bantaeng, Sulawesi Selatan Gianyar, Bali
Bantul, D I Yogyakarta Gowa, Sulawesi Selatan
Banyuwangi, Jawa Timur Gresik, Jawa Timur
Batam, Riau Hulu Sungai Tengah, Kalimantan Selatan
Bekasi, Jawa Barat Hulu Sungai Utara, Kalimantan Selatan
Bengkalis, Riau Indragiri Hulu, Riau
Berau, Kalimantan Timur Indramayu, Jawa Barat
Bima, Nusa Tenggara Barat Jember, Jawa Timur
Binjai, Sumatera Utara Jepara, Jawa Tengah
Blitar, Jawa Timur Kampar, Riau
Blora, Jawa Tengah Kapuas Hulu, Kalimantan Barat
Bogor, Jawa Barat Karang Asem, Bali
Bojonegoro, Jawa Timur Karawang, Jawa Barat
Bolaang Mengondow, Sulawesi Utara Karimun, Riau
Bone, Sulawesi Selatan Kebumen, Jawa Tengah
Boyolali, Jawa Tengah Kediri, Jawa Timur
Buton, Sulawesi Tenggara Kendal, Jawa Tengah
Kendari, Sulawesi Tenggara Rembang, Jawa Tengah
Klaten, Jawa Tengah Rokan Hilir, Riau
Klungkung, Bali Rokan Hulu, Riau
Kota Baru, Kalimantan Selatan Sambas, Kalimantan Barat
Kudus, Jawa Tengah Sampang, Jawa Timur
Kutai, Kalimantan Timur Sanggau, Kalimantan Barat
Labuhan Batu, Sumatera Utara Sangihe Talaud, Sulawesi Utara
Lahat, Sumatera Selatan Semarang, Jawa Tengah
Lampung Tengah, Lampung Sidenreng Rappang, Sulawesi Selatan
Lampung Utara, Lampung Sinjai, Sulawesi Selatan
Landak, Kalimantan Barat Situbondo, Jawa Timur
Lima Puluh Koto, Sumatera Barat Sleman, D I Yogyakarta
Lombok Timur, Nusa Tenggara Barat Solok, Sumatera Barat
Luwu Utara, Sulawesi Selatan Soppeng, Sulawesi Selatan
Madiun, Jawa Timur Sukoharjo, Jawa Tengah
Magelang, Jawa Tengah Sumba Barat, Nusa Tenggara Timur
Majalengka, Jawa Barat Sumbawa, Nusa Tenggara Barat
Malang, Jawa Timur Sumedang, Jawa Barat
Manado, Sulawesi Utara Tana Toraja, Sulawesi Selatan
Manggarai, Nusa Tenggara Timur Tanah Datar, Sumatera Barat
Maros, Sulawesi Selatan Tanggamus, Lampung

45
Education Sector Review Volume 2

Table 13 Districts Sampled

Mataram, Nusa Tenggara Barat Tapanuli Tengah, Sumatera Utara
Medan, Sumatera Utara Tapanuli Utara, Sumatera Utara
Metro, Lampung Tapin, Kalimantan Selatan
Muara Enim, Sumatera Selatan Tarakan, Kalimantan Timur
Muna, Sulawesi Tenggara Tegal, Jawa Tengah
Ngada, Nusa Tenggara Timur Temanggung, Jawa Tengah
Nganjuk, Jawa Timur Timor Tengah Selatan, Nusa Tenggara Tim
Nias, Sumatera Utara Timor Tengah Utara, Nusa Tenggara Timur
Ogan Komering Ulu, Sumatera Selatan Toba Samosir, Sumatera Utara
Pacitan, Jawa Timur Toli-Toli, Sulawesi Tengah
Padang Panjang, Sumatera Barat Tuban, Jawa Timur
Padang Pariaman, Sumatera Barat Tulungagung, Jawa Timur
Palembang, Sumatera Selatan Ujung Pandang, Sulawesi Selatan
Palu, Sulawesi Tengah Wajo, Sulawesi Selatan
Pangkajene Kepulauan, Sulawesi Selatan Way Kanan, Lampung
Pasaman, Sumatera Barat Wonosobo, Jawa Tengah
Pasir, Kalimantan Timur Yogyakarta, D I Yogyakarta
Payakumbuh, Sumatera Barat
Pekalongan, Jawa Tengah
Pemalang, Jawa Tengah
Pematang Siantar, Sumatera Utara
Pesisir Selatan, Sumatera Barat
Pinrang, Sulawesi Selatan
Ponorogo, Jawa Timur
Pontianak, Kalimantan Barat
Probolinggo, Jawa Timur

46
Chapter 1
Appendix 1.5. Organizational Issues for Depdiknas under
Decentralization
Since function assignment is still being de-
bated and since form should follow function,
it is difficult to be exactly prescriptive about
bureaucratic form for Depdiknas and other
national-level bodies such as MoRA, where
the assignment of basic decentralization
functions is even less clear. However, based
on the logic of decentralization that Indone-
sia has set out for itself as embodied in vari-
ous laws and based on international
experience, a few pointers can be set out. It
needs to be noted that there is no necessary
correspondence between organizational
structure and performance, just as there is no
necessary connection between decentraliza-
tion and educational performance. How-
ever, there are organizational structures for a
national ministry that make more sense than
others in a decentralized or decentralizing
education system. This section covers two
issues: a) size (which is subdivided into dis-
cussions of personnel and budget) and b)
structure.
Size
Personnel Size
Judging from international practice, for the
national level to have less than one in one
thousand of the total pre-tertiary education
staff in the country would be too few. At
one extreme, Canada has no national Minis-
try, so in a sense it has zero staff (though it
has a council of provincial Ministers with a
secretariat of 40 or so) at the national level.
A more realistic illustration might be China,
a nation with approximately six to seven
times more pre-tertiary students than Indo-
nesia, which has only some 700 professional
employees at the central ministry level. This
is the case even though China has one of the
lowest ratios of central to sub-national per-
sonnel in the world across all governments
and though its education system is not nec-
essarily an efficiently decentralized one.
South Africa’s national education workforce
is still lean but not at the Chinese extreme.
47
Governance and Management under Decentralization
The South African Department of Education
employs only some 500 employees in a
country with some 350,000 teachers and a
little less than one-third as many students as
Indonesia. The rest of the country’s educa-
tion personnel are employed by the decen-
tralized provinces. Argentina has a little less
than one-fifth as many students as Indonesia
and about 1,200 national employees. Even
decentralized countries can have fairly large
staffs at the central level if they can afford it
and depending on the degree of true decen-
tralization.
Spending Size
Spending by central ministries as a percent-
age of total spending at the pre-tertiary level
in decentralized countries ranges all the way
from less than 10 percent (in China, the US,
South Africa, and Hungary) to as high as 20-
40 percent (in Australia, Poland, and Spain).
Spending at the central level is usually
higher as a proportion of total spending than
staffing at the central level. This is because
much national spending in decentralized
countries takes the form of grants, transfers,
or project support of various types to lower-
level governments as opposed to the direct
purchase of inputs (including labor) into in-
struction or school administration.
Structure
Indonesia’s education system is far from be-
ing effectively decentralized yet. Decen-
tralization is not only new, but in its early
days, it has not been well-defined. Decen-
tralization is a process that has taken some
20 years in Spain, and some 15 years in
Chile. South Africa started decentralizing in
1994, reached some degree of fiscal stability
in 1998 or so, and began reaping some qual-
ity improvements in 2001 or so. In a sense,
decentralization is never finished, as can be
seen in the constant re-design and re-
assessment of the systems in the United
Education Sector Review
States after 200 years as a decentralized so-
ciety (for example, the ongoing debate as to
whether district education boards should be
elected or appointed or whether they, or
mayors, should control education in a mu-
nicipality—see Case 3 in Appendix 1.3).
The functions that a ministry in a decentral-
izing country should perform are different
from those the same ministry might perform
in a country that is already effectively de-
centralized. Thus, looking at international
examples of countries that are already de-
centralized (such as the UK, Spain, and the
US) is of limited, but some value. Looking
at decentralizing cases is more interesting,
but there is a danger that one may try to
learn lessons from countries that are con-
stantly decentralizing but getting there only
slowly (Colombia). Chile, South Africa,
Argentina, and Hungary are examples of
countries that have “achieved” some degree
of effective decentralization but are still suf-
ficiently dynamic that there is an ongoing
decentralization process for the national
level to support. Judging by these cases, a
central ministry in a decentralizing system
should not implement education but instead
should:
1. Set standards and measures of
performance, ideally outcome
measures rather than input ones;
ensure that these indicators are
measured and reported (includ-
ing information systems); set
goals and/or minimum service
standards, again outcome-
oriented.
2. Focus on institutions of delivery
(schools, colleges) rather than
“levels” (primary, secondary).
3. Ensure competition and emula-
tion between decentralized re-
gions.
4. Ensure that decentralized units
can come up to standard through
systems development, training,
and by advocating for effective
funding.
5. Perform, or ensure performance,
of functions with large econo-
48
Volume 2
mies of scale, perhaps by bro-
kering associations between dis-
tricts or provinces.
6. Use funding or norms (such as
requiring districts to enroll chil-
dren from outside the district,
and then funding them to do so)
to correct spillovers between re-
gions, for example, in special-
ized areas of education where
one institution could serve more
than one district.
7. Keep up funding levels and en-
courage local levels to pursue
equity in outcomes by creating
regulation on the internal distri-
bution of funding within dis-
tricts if possible, and by moral
persuasion if direct regulation is
deemed too intrusive into dis-
trict affairs.
8. Carry out overall system plan-
ning, forecasting, and invest-
ment prioritization, including
forecasting and analyzing
teacher supply and demand.
9. Encourage experimentation and
disseminate lessons learned
from that experimentation.
The organizational structure corresponding
to such a “modern” set-up can be seen in the
organigrams for two very different Minis-
tries of Education: 1) Korea, an Asian uni-
tary republic where students score extremely
well in international comparative assess-
ments (Figure 1), and 2) Argentina, a Latin
American federal republic with an education
system of medium effectiveness by middle-
income country standards (Figure 2).12 It
would be possible to produce organograms
for strongly decentralizing developed coun-
12
Note that, since the focus of this ESR is pre-
tertiary education and education as such rather
than culture, science, sports, and other ancillary
functions often assigned to Ministries of Educa-
tion, we have glossed over the details in the parts
of the organigrams that correspond to such func-
tions.
Chapter 1
tries such as Spain or unitary developed
countries that are still experimenting such as
the UK, as the organizational lessons are
almost exactly the same. As noted, it should
not be inferred that causality can be ascribed
to any particular type of structure. The point
is simply that, in modernizing and decentral-
izing countries, the bureaucratic structure at
the center tends to have certain functions,
but it should not be assumed that institu-
tional reorganization at the center of the sys-
tem will necessarily have a direct and
predictable impact on the quality of educa-
tion. What ultimately matters is incentives
and behavior at the classroom and school
levels, but there are ways to organize levels
higher than the school so that they are opti-
mized to support schools. This is what
49
Governance and Management under Decentralization
most modernizing and/or decentralizing
ministries seek to do.
It should also be noted that some countries
have quite a good decentralization structure
in terms of the relations between schools,
districts, or provinces (or some other inter-
mediate level) and the national level, but the
internal organization of the national-level
ministry may still not be as good as it could
be. A good example of this is South Africa,
where the structure of decentralization, in
terms of the relations between national, pro-
vincial, and school levels, is well thought-
through and very close to international best
practice, but the internal organization struc-
ture of the national Department of Education
is old-fashioned and not optimally suppor-
tive of the decentralized structures under it.
 Figure 1. Structure of Ministry of Education, Republic of Korea

Minister

Information Technology Planning

Vice-Minister
Audit Information Technology Support
International Cooperation
Inspector General and Information
Technology Internatinoal Cooperation
Inspection

Lifelong and
Planning and School Policy Human Resources Local Education
Vocational University Affairs General Affairs
Management Development Services
Educaiton

Planning and
Teacher Policy
Budget

Administrative Various subunits

Management School
Teacher Policy
Policy

Legal Affairs
Curriculum Teacher Education
Policy and Development
Education
Facilities
Asessment and Teacher
Evaluation Welfare
Women's
Education

Emergency
Planning

50
 Figure 2. Structure of Federal Ministry of Education, Argentina

Minister of Education

Secretary for
Secretary for Secretary for
Science, Technology,
Education University Policy
and Innovation

Subsecretary for Subsecretary for Various subunits

Administrative Quality and Equity
Coordination

National
National
DG DG National Directorate:
DG Directorate:
Finance and International Directorate: Curriculum and
Legal issues Information and
Management Funding Targeted Funding Teacher
School Quality
Development

Directorate: Directorate:
Directorate:
Accounting and Human
Budget
Finance Resources

51
Education Sector Review
Based on these considerations, Depdiknas is
not currently optimized to support the
decentralization process or a decentralized
system. The following are suggestions for
ways in which it could be reorganized to
make it more supportive of a decentralized
education system:
1. In a largely non-implementing min-
istry there is no obvious need for a
large Inspectorate. This is not to say
internal audit functions and the audit
of sub-national units in charge of
projects should be neglected, but the
unit performing internal and special
project audit, while strong and well-
staffed, need not be very large. The
internal audit function should be
part of the internal ministry staff
function, in other words, organiza-
tionally it should be placed in a
manner similar to that of Korea.
2. A distinction needs to be made be-
tween the “staff” working on func-
tions that are internal to the ministry
(generally associated with some-
thing like a Secretary General), such
as human resources, budget, pro-
curement, on the one hand and sup-
port to decentralized regions
carrying out those same functions
on the other.
a. The offices performing
functions internal to the
ministry can be fairly small.
b. The technical focus of these
functions will need to
change. For example, pro-
curement expertise should
shift from materials to tech-
nical assistance and re-
search and development
contracts. This will also re-
quire better links between
technical staff and central
staff. It is likely to require
the retraining of some staff.
3. Units providing assistance to sub-
national governments in functions
such as human resources, budgeting,
and procurement should be bigger
52
Volume 2
and more prominent than the units
performing such functions internal
to the national ministry itself and
should be quite separate from them.
In a sense, these units should be
considered “line function” units just
as important as traditional line units
such as “basic” or “tertiary” or “vo-
cational.” The structure of the Ko-
rean ministry is a good example in
this regard. At a minimum, such
units should be headed by a Director
General (and not the Secretary Gen-
eral) such as a Director General for
Policy and Planning, who would
cover not only the traditional policy
and planning issues but also these
issues related to administrative and
governance support to regions.
4. However, incentives should be cre-
ated for staff working in such units
to work in tandem with the internal
Depdiknas staff because the latter
often have practical know-how,
such as how the personnel databases
operate. Without such practical
know-how, staff in such a Policy
and Planning Directorate General
will tend to be seen by their regional
counterparts as “mere theoreti-
cians.” Some of these key support
functions would be:
a. Funding and developing fi-
nancial norms, such as
model funding norms for
districts to fund or provision
schools.
b. Developing models and
tools for personnel (teacher)
management.
c. Improving procurement of,
for example, books.
d. Developing information
systems.
e. Continuing governance and
management development.
5. The Directorate General for Policy
and Planning should be divided into
two (or more) broad areas, to handle
a) these financial, administrative,
and governance support functions
Chapter 1
and b) the traditional curriculum,
accreditation, and examination func-
tions. Alternatively, there could be
two Directorate Generals, one for
these “systems” issues and another
for the more traditional educational
ones.
6. Given that the functions of Depdi-
knas will be evolving towards pro-
viding support and technical
assistance to lower levels, most of
its job descriptions will have to
change. In fact, thinking in terms of
describing jobs that exist to support
regions in the decentralization proc-
ess is a fairly good way to establish
the new functions, since the new
functions are not to be performed by
the institution as an abstraction but
by people.
The following aspects of various existing
decentralized education systems around the
world illustrate the suggestions listed above.
There is naturally no perfect system, and all
of the systems below are simply compro-
mises where the solutions to certain prob-
lems have created other problems.
x The higher-level organization chart
(as specified by decree) for Argen-
tina’s national Ministry of Educa-
tion, Science, and Technology does
not even refer to traditional lines
such as “primary” or “secondary.” It
has a Sub-Secretariat for Quality,
with Directorates for Information
and Assessment, Equity Programs,
and Curriculum and Teacher train-
ing; it also has a Directorate for
Technical-Administrative Assis-
tance. This is the case in Korea as
well. Note that in both cases the
emphasis is on supporting functions
and institutions, not traditional “lev-
els.”
x In the UK’s Department for Educa-
tion and Skills, there are five Direc-
tors-General for Schools, Youth,
Corporate Services and Develop-
ment, Lifelong Learning, and Fi-
53
Governance and Management under Decentralization
nance and Analytical Services.13
Note the focus on Schools (as insti-
tutions) rather than on “education”
as an abstraction, and note that only
one of the DGs, if that, is focused on
traditional “line” functions and the
others deal with analytical and sup-
port functions. This makes sense,
given that the goal of the Depart-
ment is “only” to: “develop and im-
plement policies and programs – by
setting the framework of standards,
accountability, devolution, and cus-
tomer choice for each phase of edu-
cation.”
x South Africa’s Department of Edu-
cation has only one Director Gen-
eral and four Deputy Directors
General: three for line functions
(higher, general, and techni-
cal/vocational) and one for policy
and planning. The latter takes on
tasks such as setting norms for how
provinces fund their schools and
providing technical assistance in the
development of school-based gov-
ernance and information. The pol-
icy and planning “branch” works
directly with the provinces when it
comes to implementation but also
sees the “line” branches as its clients
when developing norms or policies.
Traditional functions such as cur-
riculum development are embedded
in the line functions. Staff functions
are performed within the policy and
planning “branch,” but that has been
an uncomfortable compromise. As
noted above, this is a relatively old-
fashioned approach, and while
South Africa has a highly regarded
system of inter-governmental rela-
tions, it is not clear that the internal
structure of the national Department
13
Not shown, but available at
http://www.dfes.gov.uk/deptreport2002/pdf/01-
Prelims.pdf.
Education Sector Review
of Education is optimal.14
x Organizational models such as those
suggested here are not unique to
geographically decentralized coun-
tries. Korea’s education system is
effective, but it is not decentralized
in a geographical manner similar to
those of countries discussed above.
Nevertheless, Korea’s Ministry of
Education is organized entirely
without the traditional line functions
that usually exist in an
“implementation” ministry, similar
to those of, say, the UK.
14
In South Africa, the Ministry as such is very
small and exists only to support the Minister as a
political appointee. The Department, which con-
tains most of the employees, runs all of the bu-
reaucratic and operational affairs and is headed
by a single technical appointee on contract who
answers to the Minister.
54
Volume 2
The main “line” headings in Korea’s
organization are: 1) Planning and
Management, 2) School Policy, 3)
Human Resources Development, 4)
Lifelong and Vocational Education,
5) University Affairs, 6) Local Edu-
cation Services, and 7) General Af-
fairs. The functions such as audit
and inspection are to the side of the
main headings to the main headings
(they are not line functions).
Bearing all of the foregoing in mind, Figure
3 on the following page sketches a possible
organizational structure for Depdiknas.
 Figure 3. One possible organizational structure for Depdiknas

Minister

Inspector General
(focus on financial and Secretary General
audit issues only)

HR Internal to
Ministry
Policy and Planning General education Lifelong education Higher education

Budgeting and
Financial Controls of
Institutional Finance Ministry and
(Funding formula Curricular analysis, Nationally-Run
support, norming, development, norming, Various subunits Programs
policy; budget dialogue) and support

Other functions
Teacher policy on internal to Ministry
Information systems and or nationally-run
evaluation, in-service
data gathering programs
training, pay,
deployment

Institution (schools.
colleges, universities)
measurement and quality
assurance

Governance and
management norming
and support to districts
and schools

Research and policy

analysis on structural
issues, coordination of
policy support to
Minister

55
Education Sector Review
Appendix 1.6. Minimum Service Standards as Management and
Governance Tools
Minimum Service Standards (Standar Pelaya-
nan Minimal–SPM) are potentially a useful
governance and management tool. However,
if misapplied, they can be a hindrance or,
worse, can actually undermine decentralized
governance. This Appendix tackles the issue
of whether SPMs in Indonesia, as the situation
currently stands, are likely to be more of a
help than a hindrance.
The basic decentralization law, No. 22/1999, is
silent on the issue of minimum standards. It is
Government Regulation No. 25/2000 that calls
for the preparation of guidelines for determin-
ing SPMs that must be “implemented” by local
governments. Other recent regulations, such
as Government Regulation 105 of 2000, have
specified that local government budgets should
be performance-oriented, based on minimum
standards that measure performance. Gov-
ernment Regulation 108 of 2000 also calls for
minimum standards in the evaluation of local
government performance. In response to these
various regulations, Indonesia began in 2002
to devise some SPMs with some false starts
and some confusion due in no small measure
to a lack of clarity in the legislation, including
the definition of terminology (see Donor SPM
Working Group 2002, also GTZ-Support for
Decentralization Measures et. al. 2003). (This
problem is compounded by the Education
Law, No. 20/2003, as noted in other sections
of this chapter.) However, in spite of a rocky
start, the process, under a MoHA-led “model-
building” exercise, had produced a set of draft
minimum standards for the education sector by
mid-2003 (Departemen Pendidikan Na-
sional/Unit Fasilitasi Desentralisasi Pendidi-
kan, 2003).
In gauging the likely impact of minimum stan-
dards on decentralized governance, it is impor-
tant to note that there is no accepted body of
theory or practice that can be used as a solid
basis for guidance (see Ferrazzi, 2002). How-
ever, minimum standards can also be ap-
proached from the point of view of more
generally accepted practical and theoretical
notions of decentralization and intergovern-
mental public finance (see Smoke, 2002 and,
for interesting similarities to a very different
56
Volume 2
sector with salutary lessons for education, see
Baker and Trémolet, 2002). It also makes
sense to anchor the discussion of SPMs in the
specific context of the overall process of de-
centralization in Indonesia. If one then adds
what little international evidence does exist,
one has some basis for judging the current
state of affairs with regard to education SPMs
in Indonesia according to the following crite-
ria:
x Numbers: Are there too many or too
few? Are the numbers, by sub-issue
or sub-function, appropriate to the im-
portance of the issue or sub-function?
x Type: True service standard or aggre-
gate indicator?
x Motivation and use: Vertical reporting
or horizontal reporting? Accountabil-
ity to citizens or to politicians and bu-
reaucratic management?
x Technical quality: Are the SPMs well-
specified and measurable?
x Level to be reached: Are the levels of
the indicators to be reached too high
or too low?
x Level at which measured: Are the dis-
trict-level indicators based on school-
level or unit-level indicators? Are
they measurable as a by-product of
unit-level managerial needs?
Before applying these criteria to the draft edu-
cation SPMs in Indonesia, it is useful to ex-
pand a little on these concepts, based on
decentralization and public finance theory and
practice and on what little international evi-
dence does exist. Thus, in each case below,
we discuss first a little of the “theory” and then
apply the “theory” to the Indonesian education
case.
Numbers
Certainly, it is better to have few standards
than to have none. The usual reason given for
the desirability of standards is circular: stan-
dards are assumed to be self-evidently good
because no one would argue for things to be
sub-standard. But the more fundamental rea-
son for having standards is that they lower the
Chapter 1
transaction costs involved when social or eco-
nomic agents hold each other accountable.
Thus, the criterion by which to judge whether
an appropriate number of standards is being
used is whether the number of standards really
helps agents to hold each other accountable,
whether standards are in fact lowering transac-
tion costs or increasing them, or whether the
transaction costs they avoid are worth the cost
entailed in tracking the standards. Further-
more, clearly those sectors where policymak-
ers believe that accountability is most
important (perhaps because they require a
higher proportion of the national budget)
should have more standards. Having too many
standards can actually reduce accountability if
the number gets to the point where it is unreal-
istic to expect so many to be monitored.
Worse, a proliferation of standards, especially
if they are set too high or if their numbers are
out of proportion to the intrinsic importance of
the area in question, can be a signal that spe-
cial interest groups are trying to capture budg-
etary resources, by mandating, say, that
schools or districts must have teachers teach-
ing in specialized areas. Finally, the appropri-
ate number of standards will also depend on
the type of standards in question. (See below
for a discussion of types.) If the standards be-
ing set are of the consumer-satisfaction or citi-
zen-rights type, it is likely that the optimal
number may be fairly high. If standards are
for purposes of bureaucratic or political ac-
countability and diagnosis, the optimal number
is likely to be much smaller.
One reason to prefer more, rather than fewer,
indicators, is that having a clear set of indica-
tors allows local governments to stick to their
core mission. If DPRD members are seen as
venal or not very capable and local citizens are
prey to populist illusions such as “fiscal illu-
sion” (the belief that resources that come from
a central level are “free”—see Dollery and
Wallis 2001), they can easily fall prey to spe-
cial interests who try to force local govern-
ments to compete with each other in providing
non-essential services. By the logic of collec-
tive action, it is naturally the less “general” in-
terests that are able to steer public funding
towards their favorite cause. Hence, it is pos-
sible that special interests could start races be-
tween local governments in providing services
or sub-services that are of more special interest
such as sports or music, drawing managers’ at-
57
Governance and Management under Decentralization
tention away from the more central and gen-
eral interests, such as basic general education,
that have less organized defenders. Setting
minimum standards and obligatory functions
and maintaining a strong central role in poli-
cymaking can prevent this sort of “whip-
sawing” of local governments.15 However, as
will be seen below (where undue attention is
sometimes given to sports education or to
teachers in general), at the moment the central
government in Indonesia seems more likely to
abet special interests than to control them.
In Indonesia, as the draft minimum standards
document currently stands, it appears that
there are simply too many standards, or, indi-
cators, and that they are grossly out of propor-
tion to the importance of the areas in question.
The draft contains 197 indicators, all with ap-
parently equal priority. True, many of them
are repetitive, since, for example, the draft re-
quires that data on enrollment rates be col-
lected at the primary, junior secondary, and
senior secondary levels. Nonetheless, to ex-
pect managers to agree to be held accountable
for 197 indicators, without any real sense of
prioritization among them, seems either naïve
or cynical. Few competent managers would
agree to be truly held politically accountable
for that many indicators. Furthermore, the
numbers are out of all proportion to their in-
trinsic importance. While there are only 18
indicators related to primary schooling, there
are 22 indicators related to sports education,
and while there is an indicator that induces
better reporting of sports statistics, there is no
similar indicator inducing the reporting of
educational statistics. This is not necessarily
to suggest that the latter should be added; it is
more to suggest that the former is excessive.
The clear impression is that tracking this many
indicators will increase rather than lower the
15
“Whip-sawing” is a style of collective bargaining
in which a powerful union negotiates with more
than one employer, pitting one employer against
another and forcing each employer in turn to meet
or exceed the agreement that the union previously
made with a different employer. The same applies
to special interests pitting local governments
against each other and to any sort of negotiation in
general. A whip-saw is a saw operated by two
people, where the cutting requires a back-and-forth
motion.
Education Sector Review
transaction costs related to accountability and
runs the risk of skewing accountability by
forcing managers and governors to concentrate
equally on essential and non-essential items.
Both the absolute numbers of indicators and
proportionality between them needs to be seri-
ously revisited.
Type, Motivation, and Use
Across the world, the overwhelming majority
of “minimum service standards” are con-
sumer-level or citizen-level standards of direct
service delivery. Some examples of these in-
clude citizens being notified more than 24
hours in advance of any planned interruption
in service or specifying that parents will be in-
formed of their children’s end-of-year test
scores within four weeks or that a local educa-
tion office will respond to any query from a
school within forty-eight hours or that parents
have a right to know the average test scores of
all the schools in the district. These standards
can be set irrespective of political ideology or
whether one regards the subject of service as a
“client” or “consumer” in a “marketized” ap-
proach or as a “citizen” with rights in a “hu-
man-rights” approach. Thus, institutions
advocating quality improvements from a
rights-oriented viewpoint emphasize the indi-
vidual-level service standards (see Theis,
2003) as much as traditional corporatist insti-
tutions. (For a discussion of the changes in
perspective and ideology involved in the
“Charterist” or MSP approach in the UK,
which applies fairly generally, see Falconer,
no date, or Wallis and Dollery, 2002.)
If not at the level of direct service provision,
indicators should at least refer as much as pos-
sible to outputs of the system rather than in-
puts. In cases like governance, where process
is in effect the output, it is vital to have proc-
ess indicators, such as ensuring that govern-
ance bodies (such as School Committees) are
working to norm, e.g., have the right number
of parents as opposed to teachers, and have
followed proper nomination procedures to
elect the members.
At present, the draft Indonesian SPMs are de-
signed to make schools and districts account-
able to the central education ministry rather
than to clients or citizens. They are very often
input-oriented and tend to cover such aggre-
58
Volume 2
gated data as the gross or net enrollment ratios
that risk being too general to be useful at the
local level. Of the indicators that we re-
viewed, only one or two would be of any in-
terest to a particular parent, such as the
proportion of students who pass a given exam.
Few parents are likely to care whether the
gross enrollment rate is 70 percent or 90 per-
cent as long as his or her child is enrolled in
school. Nor do the SPMs focus on workers
within the system and the accountability of
system units to each other. Similarly, they do
not contain any service indicators such as the
time it would take the Dinas Pendidikan to ful-
fill a school’s book order or how long it would
take to register a teacher’s promotion and no-
tify the payroll system, and for the teacher’s
promotion to be reflected in his or her pay.
The whole ethos of providing parent-oriented
service indicators or indicators of mutual ac-
countability is absent from Indonesia’s current
draft SPMs.
As noted above, when indicators focus on di-
rect service provision, it may optimal to have
rather more indicators than when indicators are
used for upward accountability or horizontal
but political accountability. The reason for this
is because each individual client is likely to
want to hold service providers accountable ac-
cording to the indicator that interests him or
her and because indicators bearing on direct
service delivery are likely to be more immedi-
ate to the actual process and characteristics of
service delivery and to the everyday tasks of
the service delivery agents. Furthermore, in-
dividual clients are less likely than system
managers to act as interest groups engaged in
rent-seeking; their actions are more likely to
be consistent with actual welfare. Thus, if in-
dicators are oriented towards making service
providers accountable to clients, then there is
likely to be little loss of focus from having a
few more indicators.
One suggestion would be for Indonesia to con-
sider replacing many of its current aggregate,
top-down indicators, with citizen-level and
unit-level indicators that will enable both hori-
zontal and reverse accountability. (Reverse ac-
countability means, for example, Dinas
Pendidikan being accountable to schools for
book delivery, not just schools being account-
able to the Dinas Pendidikan for the quality of
their education services.) Furthermore, the
Chapter 1
overall number of indicators should be re-
duced and those that remain should mostly be
indicators of output rather than inputs.
Technical Quality
To be useful, it is self-evident that SPMs have
to be measurable. Yet, according to the cur-
rent draft of the education minimum standards,
a minority (but a fairly large minority) of the
Indonesian indicators are not measurable or
are specified too poorly to be measurable. For
example:
x There are indicators that specify that
systems will exist to allow teachers
access to certain levels of training, and
the indicator is set at, say, 50 percent,
without specifying whether this means
that the systems should be 50 percent
operational, whether 50 percent of dis-
tricts should have operational systems,
or whether the systems should reach
50 percent of the teachers.
x Similarly, there are indicators for such
vague things as the percentage of
youths taking part in training that im-
proves their character and attitude,
without specifying how one might
measure whether a program helps im-
prove attitude or character, or whether
in fact the students’ character and atti-
tude have in fact been improved. The
issue of self-selection (youths of fairly
good character are more likely to join
such programs) needs to be taken into
account. In principle, one could cer-
tify certain courses as being “charac-
ter-improving” and then count those,
but this would require the onerous task
of certifying just about every course of
any kind available to students and still
avoids the fundamental measurement
issue.
x On a more important point that refers
to basic educational delivery, there is
an attempt to measure “teachers’
readiness to teach,” and a standard is
set at 90 percent. But the indicator re-
fers to a number of extremely complex
variables for which there is little em-
pirical evidence about their effective-
ness in measuring actual readiness to
59
Governance and Management under Decentralization
teach and which are not weighted in
any way.
x Many districts in Indonesia are quite
small. Measurement of such key vari-
ables as dropping out or moving up to
a higher education level will therefore
generally be extremely unreliable. In
small and generally under-supplied
districts, transition rates will probably
appear to be very low. In large, well-
supplied districts that are situated next
to smaller and less well-supplied ones,
the transition rate to higher levels of
education (junior or senior secondary)
appear to be higher than 100 percent
because children are migrating, either
on a day-to-day basis, or sent to live
with relatives, to take advantage of
educational opportunities. This will
make indicators such as dropping out
and transition rates extremely difficult
to measure—in fact impossible, in
practice.
It does not do any good to wish these matters
away: they are fundamental measurement
problems, and attempting to measure the un-
measurable creates, rather than reduces, social
and bureaucratic tension, and makes citizens
lose respect for the state. In short, there are
quite a few indicators in the draft document
that have simply not been well designed.
In the case of some of the indicators, even
though measurement is possible in theory, in
practice it will turn out to be very difficult be-
cause there are no actual delivery units on
whom it makes administrative sense to gather
the data. One example would be the proposal
to track the number of youths participating in
an economically meaningful activity. (See be-
low on the importance of data being a by-
product of administrative practice.) It would
be possible in principle to use random sample
surveys to measure this indicator, but note that
random sample surveys are no good for track-
ing the data needed for accountability except
at the very highest and most aggregated level.
This is a much more serious problem than the
problem of the theoretical inadequacy of the
indicator.
Education Sector Review
Level at which Indicators are Set, Level
to be Reached
In a competitive market or in a democracy,
government (in the case of markets) or higher-
level governments (in the case of governance)
need not in principle set the levels of any per-
formance standards. The role of the govern-
ment, for example, should be limited to
establishing the whole system of weights and
measures as a standard and ensuring that all
merchants sell in kilograms rather than some
in kilograms and others in pounds and others
in bushels (thus creating transparency for con-
sumers). However, the government should not
tell merchants how much to sell or at what
price. Similarly, in a competitive political en-
vironment where local bureaucrats and politi-
cians have to compete for votes and taxes,
higher levels of government should ensure that
lower levels of government can be judged
against a common set of standards but need
not necessarily set a level for those standards.
In either case, competition and emulation will
set the optimum level at which transactions
take place, in other words, the level that con-
sumers want and at which producers can af-
ford to produce. This will vary from place to
place and from person to person because eve-
ryone and every local government has differ-
ent needs and different capacities. Setting a
fixed level is by definition sub-optimal, unless
every citizen has exactly identical preferences
and every firm and local government has ex-
actly identical technology, natural resources,
and capital, which is never the case.
In situations of monopoly, however, the gov-
ernment does set the actual level of expected
service provision, as is the case in the devel-
opment of service standards for either public
or private public utilities that are “natural”
monopolies. These standards are, or should
be, contained in the licensing of new utilities,
such as cell phone or cable television licenses.
Similarly, in situations where local govern-
ments affect each other in non-measurable
ways (“externalities,” as in the case where citi-
zens with secondary education are likely to
migrate from the areas where they were edu-
cated, thus benefiting the receiving areas with
services they did not pay for) it makes sense
for government to mandate certain levels of
provision that assure the national interest—
otherwise the local area has a disincentive to
60
Volume 2
invest. Finally, in situations where horizontal
accountability mechanisms (accountability of
local government to DPRD or citizens, for ex-
ample) are still weak, it is justified for higher-
level government to set levels of key indica-
tors, not just the indicator framework as such.
But the cases where specific levels are stated,
in Indonesia, are excessive, as they go beyond
the above-stated justifications. Even if, as
appears to be the case, the policy is that the in-
dicators can be reached at different speeds by
different governments, having the same termi-
nal point still does not make sense, in many of
the indicators. For example, it is not clear why
every local government should value sports
the same (and it is difficult to argue that sports
represent a serious externality) or why the
fight against HIV/AIDS or drug abuse should
be fought at exactly the same level of intensity
in every district, when it is well-known that
both HIV/AIDS and drug abuse tend to happen
in geographical clusters. Yet the SPMs are ex-
tremely detailed regarding sports indicators
(for example, something to the effect that 15
percent of athletes in every location should be
winning or should be competing at the highest
organized level!), yet totally silent on many
other areas of education for life, such as art or
music. Perhaps some local governments
would rather have less sports education and,
say, more gamelan education. Yet music or
arts education is not at all covered. This is not
to say that arts and music education should be
covered; it is to say that the current coverage
of areas such as sport is extremely excessive.
And, this is only one example—there are quite
a few other such cases. One could argue that
this imbalance already represents a “capture”
of local government by special interests,
though in this case with the connivance of cen-
tral government. It is clear that this is not
likely to be the intent, but it is nonetheless the
practical effect—hardly an optimal role for
central government to be playing.
The level (and the numbers) at which the indi-
cators are set might also “set up” local gov-
ernment for failure, which would be an excuse
for the central level to “re-centralize.” Few
central organizations give up the privileges of
centralization willingly, so it is logical that
they would try to reassert control, and one way
to do so is to set the goals very high so that lo-
cal governments fail. Even if the motivation
Chapter 1
were not so undesirable, a moment’s reflection
will suggest that the national government ap-
pears to want to hold local governments ac-
countable with a degree of specificity and at a
level that it did not hold itself effectively ac-
countable to citizens during the period of cen-
tralization. The fact that the standards
suddenly appear higher when it is someone
else (local governments) that is being held ac-
countable should be cause of some concern re-
garding the sincerity of motivation in the
SPMs, and is likely to be noted by local au-
thorities as a questionable intention on the part
of central government.
Finally, it should be noted that, with only one
exception to our knowledge (Lewis, 2003), no
one is estimating the costs of the levels at
which the indicators are being set. It is not
just a matter of financial cost—that is the easy
part. In many cases, the financial cost is lower
than the opportunity cost of scarce manage-
ment talent, because the rationing of labor and
the allocation of labor to tasks, and in particu-
lar scarce high-level management talent, in the
public service is not very efficient and the hu-
man resource implications of meeting the lev-
els of the various indicators are not being
calculated either. This suggests that much
more emphasis should be put on using the in-
dicators as a framework of accountability in
which the level is not determined by fiat but is
determined through emulation and competi-
tion, for example through the issuance by cen-
tral government of comparative score-cards on
service performance of local governments.
Level at which Measured
Indicators and minimum standards should
lower the transaction costs involved in agents’
holding each other accountable, but they
should do so without imposing complex bu-
reaucratic requirements and measurement cost.
One way to do so is to make sure that the indi-
cators are measured as much as possible as the
by-product of administrative systems that as-
sist the actual delivery units (such as schools)
in the delivery process. Clearly, indicators
that are aimed at ensuring the quality of direct
service delivery to the client will accomplish
this more or less automatically (which is an-
other advantage of such indicators), but that is
only one way. In general, the indicators
should be measurable as much as possible ad-
61
Governance and Management under Decentralization
ministratively within the delivery units them-
selves, and, furthermore, the administrative
recording should be such that it directly helps
the unit itself do a better job of delivering its
services.
One solution that has been proposed to the
problem of under-reporting by schools is that
schools be supplied with the data that are
compiled by the central Education Manage-
ment Information System (EMIS), so that they
see what is done with the data. But this is not
likely to be very motivating, except initially,
as a novelty. Another idea that is similarly
unlikely to be effective is the idea that schools
supply the EMIS with data and that the EMIS
somehow makes the information available
back to the school for management purposes
as a way of creating an incentive for them to
continue collecting and reporting data. This is
also likely an unworkable proposition, as any
data useful for management will be out-of-date
by the time it makes the round trip from the
school to the EMIS and back to the school. In
the end, the most effective means of ensuring
adequate reporting from schools and districts
is a combination of a) data reporting as a by-
product of routine administrative recording by
the delivery units and b) sheer bureaucratic
pressure from the center within a strengthened
administrative system. On the first score, the
idea is to make sure schools are directly ac-
countable for certain services and feel pressure
to be so accountable, to make sure that they
understand what data helps them discharge
that accountability well, and to make sure that
the system for reporting data towards higher
levels of government mostly use the same data
as are needed at the local level, and which are
therefore reported as a by-product of good
administrative practice at the school level.
In Indonesia’s draft education SPMs, some of
the indicators are indeed a byproduct of good
administrative practice. The gross and net en-
rollment indicators, for example, are the result
of data that good schools should keep and use
in management in any case, such as records of
student numbers by grade and age (as well as
by gender). However, a few are difficult to
track because there are no units that currently
provide the services being tracked and in
whose interest it is to track the variable in
question. For example, there is an indicator
that refers to activities aimed at increasing
Education Sector Review
awareness of the value of education. That is a
fine sentiment and lofty goal, but the indicator
is set at 80 percent, without specifying what
this means. It is not clear what the numerator
and denominator should be, nor in whose in-
terest it is to track this, nor what classifies as
such an activity.
Conclusion
In summary, the education SPM exercise may
be a good beginning. However, before these
indicators can be activated, very serious work
should be done to:
x radically shorten the list of indicators.
x reduce the number of the input indica-
tors in particular.
x not set actual levels for many indica-
tors and instead use score-cards and
other means of stimulating informed
competition so as to allow “natural”
levels to be found.
x keep levels as quantitative goals in a
few key output indicators.
x think through the technical problems
and costs of gathering the indicators,
including their definition, ways to
measure them, and whether local de-
References For Appendix 1.6
Baker, B. and S. Trémolet. 2000. “Regulation
of Quality of Infrastructure Services in Devel-
oping Countries.” NERA. Paper given at the
conference on Infrastructure for Development:
Private Solutions for the Poor, London, UK,
31 May – 2 June. Word processed.
Departemen Pendidikan Nasional/Unit Fasili-
tasi Desentralisasi Pendidikan. 2003. “Kewe-
nangan Wajib Dan Standar Pelayanan Minimal
Bidang Pendidikan, Pemuda dan Olahraga.”
Jakarta: Word processed.
Dollery, B. and J. Wallis. 2001. “A Taxo-
nomic Analysis of Government Failure in Lo-
cal Government.” School of Economics,
University of New England, Armidale, Austra-
lia. Working Paper Series in Economics No.
2001-7. Word processed.
Donor SPM Working Group. 2002. “Local
Government Obligatory Functions and Mini-
62
Volume 2
livery units already exist that have an
interest in measuring these indicators
for their own administrative purposes
(if they are well-managed).
x set more indicators as direct service
delivery indicators, both for service
delivery to parents and students and
service delivery from unit to unit, and
set much fewer indicators of upward
bureaucratic or political accountabil-
ity.
x limit the use of indicators that are not
measurable as an essential element of
the administrative capacity of service
delivery units.
If this is not done, the indicators are likely to
add more to transaction costs than they will
save in transaction costs, and on top of that,
they are likely to increase measurement and
bureaucratic costs. In that case, the natural re-
action of local government and delivery units
will likely be to ignore the indicators, even if
they initially agreed to collect them. This will
tend to make enforcement costs very high, and
cause the effort to wither.
mum Service Standards: A Proposal for Con-
ceptual Development and Implementation,”
Jakarta: Word processed.
Falconer, P. No date. “Public Administration
and the New Public Management: Lessons
from the UK Experience.” Department of Law
and Public Administration, Glasgow Caledo-
nian University, Glasgow, Scotland, UK:
Word processed.
Ferrazzi, G. 2002. “Obligatory Functions and
Minimum Service Standards: A Preliminary
Review of the Indonesian Approach,” GTZ-
SfDM, Jakarta: Word processed.
GTZ-Support for Decentralization Measures,
USAID-Perform, USAID-MSH, ADB-Basic
Education, The World Bank-WBDTFID.
2003. “Draft Laporan Sintesa – Kegiatan
Model Building Kewenangan Wajib Dan
Chapter 1 Governance and Management under Decentralization

Standar Pelayanan” Minimal, Jakarta: Word
processed.
Lewis, B. 2003. “Minimum Local Public
Service Delivery Standards in Indonesia:
Fiscal Implications and Affordability Con-
cerns.” Draft version. Research Triangle In-
stitute International, Research Triangle Park,
North Carolina, USA: Word processed.
Theis, J. 2003. “Rights-based Monitoring and
Evaluation.” Save the Children: Word proc-
essed.
Wallis, J. and B. Dollery. 2002. “Styles of
Policy Leadership and Local Government Re-
form.” University of Otago Economics Dis-
cussion Papers No. 0206. Dunedin, New
Zealand.

Smoke, P. 2002. “Expenditure Assignment

under Indonesia’s Emerging Decentralization:
A Review of Progress and Issues for the Fu-
ture.” Prepared for conference on “Can De-
centralization Help Rebuild Indonesia?”
Andrew Young School of Policy Studies,
Georgia State University, Atlanta, Georgia,
USA. May 1-3. Word processed.

63
Education Sector Review Volume 2

64
 Chapter 2: Financing Education under Decentralization
Indonesia’s decentralization laws have not
only profoundly changed the distribution of
authority and responsibilities among different
levels of governments but also how fiscal re-
sources are generated and who controls them.
The old transfer system, which was character-
ized chiefly by earmarked grants from the cen-
tral government budget to provincial and
district governments, has been replaced by one
that consists largely of general grants from the
central government budget to local govern-
ments with expanded revenue sharing. Unlike
earmarked grants that have to be spent for
specified purposes, how the general grants are
used is left up to the discretion of the recipient
government. Also, the laws now allow re-
gional—that is, provincial and district—
governments to retain an increasing share of
the revenues generated from local economic
activity and natural resources. By the time de-
centralization has been fully implemented, to-
tal regional government expenditures are
expected to account for about 10 percent of
GDP or more than 40 percent of total govern-
ment spending (Hofman, Kaiser, and Goga
2003).
This fiscal and financial restructuring is likely
to affect how much public money will be spent
on education and also how efficiently those re-
sources will be spent, although many of the
specifics of these fiscal structures have yet to
be defined or clarified. This chapter discusses
the implications of these new financial ar-
rangements and identifies important issues that
should be addressed by policymakers. The
chapter begins by briefly contrasting the old
and new fiscal structures and the old and new
relationships between the central government
and the regional governments, and then goes
on to discuss the likely consequences of these
changes for the financing of education. Be-
cause financing education involves not only
increasing the amount of resources available
but also improving how those resources are
spent, the discussion covers both efficiency
and equity concerns. One important issue is
what happens within districts and within
schools. If regional governments fail to allo-
cate adequate resources to schools or if those
resources somehow do not reach schools and
65
classrooms, then education outcomes will de-
teriorate under the new regime. Finally, the
chapter offers policy options for improving al-
location mechanisms at all levels of govern-
ment, for aligning resources and financial
management with the goals of the Indonesian
education sector, and for ensuring that schools
receive adequate resources.
New Fiscal Structures under
Decentralization
Prior to decentralization, the national govern-
ment transferred public funds to the regional
governments through the Autonomous Gov-
ernment Subsidy (Subsidi Daerah Otonom or
SDO) and through Presidential Instruction
grants (Instruksi Presiden or INPRES). For
more than 30 years before 2001, the SDO was
the basic grant mechanism for recurrent ex-
penditures, while general- and special-purpose
INPRES transfers were the vehicle for devel-
opment grants. The SDO financed almost the
whole bill for the salaries and allowances of
civil servants in regional governments, includ-
ing the pay of primary school teachers. It also
covered routine expenditures such as those to
fund the operation and maintenance of school
buildings and administrative expenditures.
Meanwhile, INPRES grants, which began as a
simple block grant mechanism in the late
1960s, evolved into a diverse array of grants
with at least 15 different specific-purpose
transfers, including those for primary schools,
primary health care, roads, and agricultural ex-
tension among others (Silver, Azis, and
Schroeder, 2001 and Lewis, 2002). A lot of
the progress made in human development in
the regions has been attributed to the INPRES
grants,16 but this mechanism is said to have
been characterized also by excessive central
control, a lack of transparency in its allocation
procedures, and a lack of regional autonomy.
16
Duflo (2001) estimates that the INPRES program
raised the probability that a child would complete
primary school by 12 percent, and thus increased
the average years of schooling by 0.25 to 0.40 year
for the cohort of children during the period 1974-
78.
Education Sector Review
Figure 2.1 Post-Decentralization Financial Structure
DAU/Shared Revenues
Central
Government
DAK
Ministry of Ministry of
Religious National
Affairs Education APBD
ABPD
Provincial
government
APBN APBN
Dinas
Education
Spending
Religious Schools
Source: Hoffman, Kaiser and Goga, 2003.
Under decentralization, resource transfer ar-
rangements have changed. The new transfer
system is a combination of two grant chan-
nels—the General Purpose Fund (Dana Alo-
kasi Umum or DAU) and the Specific Purpose
Fund (Dana Alokasi Khusus or DAK)—and
shared revenues from natural resources (Sum-
ber Daya Alam or SDA) (Figure 2.1).17 Prov-
inces receive 10 percent of the total amount of
DAU transfers, while district governments re-
ceive 90 percent (Hofman, Kaiser, and Goga,
2002). In addition to these grant mechanisms,
the central government is able to expand the
resources available in the regions directly by
channeling funds from its own national budget
(anggaran pendapatan dan belanja nasional
or APBN) to public schools (through the
MoNE) and to madrasahs (through the
MoRA). The regional governments’ routine or
recurrent budgets (Daftar Isian Kegiatan or
DIK) pay for civil service expenditures, recur-
rent materials and the cost of goods, and sub-
sidies (such as for fuel and electricity) in
schools, while their development budgets
(Daftar Isian Projek or DIP) are spent on capi-
tal projects such as school construction.
17
By law, the annual DAU allocation is a minimum
of 25 percent of the central government’s total do-
mestic revenues minus any revenues shared with
regional governments.
66
Volume 2
General Flows
Earmarked Flows
District Dinas
Government Education
Spending
Public Schools
DAU Allocations
In FY2002, DAU grants from the central gov-
ernment accounted, on average, for more than
70 percent of the revenues of provincial and
district governments. In principle, these grants
are allocated according to a formula that takes
into account differences in local needs and in
local means. In practice, however, the for-
mula-based part of the grant is only a fraction
of it. The formula continues to evolve, but in
2002 the total allocation to each provincial or
district government comprised three parts,
namely, a lump sum amount, a fiscal gap
amount, and a balancing factor amount (Silver,
Azis, and Schroeder, 2001; Lewis, 2002; and
Brodjonegoro and Martinez-Vazquez, 2002).
In 2002, the lump sum component for any par-
ticular district was 10 percent of the total DAU
amount divided by the total number of dis-
tricts. The fiscal gap component was allocated
to each district based on the size of the dis-
trict’s fiscal gap relative to the country’s total
fiscal gap, with the fiscal gap being defined as
the difference between estimated expenditure
needs and fiscal capacity. This component
was designed to take the expenditure needs of
each district into account when determining
the level of its transfer. This formula for the
fiscal gap component, which was based on ac-
tual expenditure amounts in the previous year
as given by the total regional government
budget (anggaran pendapatan dan belanja
Chapter 2
daerah or APBD) and an allocation factor, has
been criticized for being mechanistic rather
than based on the real expenditure needs of re-
gional governments.18
The third component, the balancing factor or
“hold harmless” factor, was meant to ensure
that no district would receive less than it had
received the previous year. In FY2001, this
amounted to 50 percent of the total DAU allo-
cation, and the amount going to each district
was a function of the district’s share of the to-
tal civil service wage bill for the country. It
was supposed to cover the costs incurred by
districts in taking on the additional
responsibility for paying civil servants as a
result of decentralization. In FY2002, this
component funded 77 percent of each district’s
wage bill on average.
The provincial DAU allocations were derived
using a formula similar to the one used for the
districts, except that the lump sum and balanc-
ing factor components were based on 20 and
30 percent respectively of the total provincial
DAU budget (Lewis, 2002). In FY2002, each
province received a lump sum allocation of Rp
46.8 billion and funding for 31 percent of their
18
Since about 70 percent of regional expenditures are fi-
nanced through intergovernmental transfers, it makes
sense to examine the formula according to which these
transfers are allocated. The allocation criterion is an ex-
penditure needs index for each district that is based on
four characteristics of the district – population, area,
poverty, and a cost index (Lewis, 2002). The 2002 for-
mula for expenditure needs was: EN = APBD [0.4
RPop + 0.1 RArea + 0.1 RPovGap + 0.4 Rcost ], where
Rpop, Rarea, RpovGap, and Rcost represent the ratios of
a district’s population, land area, poverty gap, and cost
index to the total values for the country. These factors
were specified in Law 25/99; in 2001, they were given
equal weight. Local fiscal capacity is defined as the sum
of potential own-source revenues and shared revenues
from property taxes, personal income taxes, and natural
resource taxes. Of the four factors in the formula, popu-
lation size and poverty together measure the potential
demands on the public education system. This formula-
based allocation is similar to those used in several other
countries (Bird and Smart, 2002). For example, Japan,
Brazil, Nigeria, and Austria use similar systems in which
local governments receive a fixed share of national taxes,
and the resulting total is then distributed according to a
formula that takes into account such factors as population
and community size. In the Philippines, most funds
transferred to local governments come from a pre-
determined share of national taxes and are allocated ac-
cording to population, area, and an equalizing factor.
67
Financing Education under Decentralization
civil service wage bill. The fiscal gap ac-
counted for 50 percent rather than the 40 per-
cent that was the case with the allocation to
districts.
DAK Allocation
The DAK is a special-purpose transfer that is
supposed to finance capital expenditures that
cannot be predicted or accommodated using
the common allocation formula as well as
those that are national commitments or priori-
ties. By law, this grant cannot be used for ad-
ministrative costs or for the training and travel
of staff and other such costs. It has two com-
ponents: one is based on national reforestation
measures, which stipulate that 40 percent of
state reforestation levies on forestry companies
should be returned to the district of origin for
exclusive use in reforestation activities; and a
second is the “real” special-purpose grant for
financing national priority infrastructure in-
vestments that are outside the scope of DAU
funding. The latter, designed as a matching
grant, requires that a region’s contribution to a
project be at least 10 percent of total project
expenditures and is designed to provide dis-
tricts with incentives to build infrastructure
that meets national standards. In the past two
years, the DAK allocation has remained mini-
mal compared with the DAU allocation.
However, the central government has reiter-
ated its intention to use targeted DAK grants
to districts as a mechanism for ensuring equal-
ity among them and transparency in their op-
erations (DSEF, 2002). This grant mechanism
continued to evolve in 2003.
Raising Own Revenues
In Indonesia, Law 34/2000 has given taxing
authority to district governments. Districts,
but not provinces, are now allowed to generate
their own taxes through local by-laws under
the condition that the taxes should be author-
ized by the national government and that they
should be consistent with the principles men-
tioned in Law 34/2000.19 Since being given
19
This is not a new phenomenon, however. Law
18/1997, the previous law on local taxes and levies,
was intended to stop the practice that then pre-
vailed in local government of creating a plethora of
local government taxes. Many of these taxes had
little revenue potential but imposed high costs on
Education Sector Review
this authority, district governments have been
creating new taxes aggressively (Lewis,
2002).20 The reality, however, is that district
governments have limited capacity to raise
taxes from their own resources such as land,
buildings, and natural resources, which consti-
tute only about 5 percent of their revenues.
Provincial governments have a larger own-
resource base but must share this with district
governments. Moreover, there are large ine-
qualities in the revenue bases of the different
provinces and of the different districts. For ex-
ample, the per capita non-oil and gas GDP of
the richest province, Jakarta, is almost nine
times larger than that of the poorest province,
East Nusa Tenggara (Akita and Alisjahbana,
2002). The DAU allocation formula includes
a poverty measure and thus provides a means
of targeting those districts that are most in
need and for equalizing the potential resources
that are available to districts.
A final point on local financial resources is
that district governments are allowed to bor-
row, although their borrowing is limited by a
formula that restricts the extent to which they
can go into debt, that requires approval by the
MOF in the case of foreign loans, and that
cannot be guaranteed by the central govern-
ment. Law 25/1999 also restricts these gov-
ernments to borrowing only for projects that
will generate a financial return, but this clause
has been loosened up by the implementing
regulations, which explain that this financial
return can either be direct or indirect. At the
national level, about half of the development
budget continues to be financed by donor pro-
ject loans, and the national government cur-
rently bears the debt servicing burden on these
expenditures (Hofman, Kadjatmiko, and Kai-
ser, 2002). However, as district governments
the taxpayer and the economy. Law 18 restricted
regional taxes to a specified list and made any addi-
tional taxes conditional upon the approval of the
Ministry of Home Affairs with advice from the
Ministry of Finance.
20
Property taxes are administered and collected
mainly by the national government, although re-
gional governments assist with tax collection in ru-
ral and urban sectors. Until recently, the national
government retained 10 percent of total tax reve-
nues for its own use, 9 percent was provided to lo-
cal tax offices to assist with collection, 16 percent
to provincial governments, and 65 percent to local
governments. (Lewis, 2002).
68
Volume 2
increasingly exercise their right to borrow, it
will soon be necessary to improve the frame-
work of grants and on-lending mechanisms for
the regions.
In the future, provincial and district govern-
ments will be increasingly expected to mobi-
lize their own resources in addition to their
transfers from central government in order to
finance their expanded responsibilities.21 This
may make public spending more efficient.
When people have to spend some of their own
money on providing services, they are more
likely to want to see the whole allocation spent
wisely and frugally. Also, local governments
may be able to spend money more effectively
than the national government because they
have more access to critical information about
local needs, inputs, and providers and because
they can (and are more motivated to) closely
monitor service provision.
Several questions arise with respect to the im-
pact of the new fiscal structures on education.
Will the district governments’ expanded re-
sponsibility for education increase or decrease
the amount of resources available for educa-
tion? Will the current transfer formula make
regions more or less equal in terms of their
ability to meet national standards of provision?
Are district governments allocating sufficient
resources to schools? The next section takes a
macro view of these questions.
Public Spending for Education at the
National and Local Levels
One commonly used method for assessing the
level of government spending is to compare
numbers across different countries. Based on
1998-2000 data from several countries, Indo-
nesia ranked second lowest among its Asian
neighbors in terms of its share of education
expenditures in GDP (Table 2.1) with only
21
With the transfer of authority and management to
regional governments in Indonesia, “it is hoped that
the local governments are capable of obtaining
more funds in their regions and in managing them
more efficiently and effectively. It is expected that
the local governments are able to use or exploit the
sources of funds in the regions, such as the private
sector and other education stakeholders, in funding
education” (National Committee for Education,
Sub-Committee III, 2001).
Chapter 2 Financing Education under Decentralization

Table 2.1 Public expenditures for education: How does Indonesia compare with other Asian countries?
Per student primary ex- Percent of education
Education expenditures penditures as a percent expenditures in total
as percent of GDP [a] of GDP per capita [b] public spending [c]
China 2.2 6.58 13.0
Indonesia 2.8 4.21 9.6
Vietnam 2.8 7.26 7.4
India 4.1 12.72 13.7
Singapore 3.1 7.00 23.4
Philippines 3.5 12.69 20.6
Japan 3.5 21.41 10.5
South Korea 4.1 12.30 17.5
Thailand 5.4 17.21 20.1
Malaysia 6.2 12.88 25.2
Notes: [a] From EdStats (http://www1.worldbank.org/education/edstats), World Bank; data from 2000 or latest two years, ex-
cept for China, 1998, Vietnam, 1997 and Singapore, 1995; data are originally from UNESCO; [b] From EdStats and World
Development Indicators, World Bank; data pertain mostly to 2000, except for China, 1998 and Vietnam, 1996, Singapore and
Korea, 1997, or latest two years; [c] From EdStats; and UNESCO, 2000.

China ranking lower; however, Indonesia was
well behind China in regard to per student
primary expenditures as a percentage of GDP
and education expenditure as a percent of total
public spending. Indonesia’s education spend-
ing was 2.8 percent of GDP, as compared with
4.7 percent for Thailand and 4.6 percent for
Malaysia. As a share of total government
spending, Indonesia’s education spending was
slightly higher than Vietnam’s 7.4 percent but
was far lower than Thailand’s 20 percent.
Perhaps because Indonesia maintained its fo-
cus on getting more children in primary
schools and perhaps because the cost of inputs
was relatively low, it was able to raise enroll-
ment rates with relatively meager resources.
In FY2001, total government (actual) expendi-
ture for education was Rp 41 trillion, of which
about one-half was part of the APBD alloca-
tion. In FY2002, the APBD expenditures in-
creased to Rp 25.5 trillion. In FY2003, total
government expenditure was expected to reach
Rp 370 trillion, of which nearly Rp 77 trillion
will make up the DAU transfer to regions and
less than Rp 3 trillion will make up the DAK
transfer. The total government budget repre-
sents a 13-percent increase over actual expen-
ditures in FY2002, and total transfers to
regions have increased by 14 percent. If edu-
cation expenditures increased by as much, then
districts’ spending for education have reached
about Rp 50 trillion in FY2003, with about Rp
30 trillion coming from the APBD.
Estimates of the level of transfers that were
made to district governments in 2002 suggest
that, on average, districts have more resources
at their disposal than in the past, and the recent
trend in education spending suggests that dis-
tricts are spending more of those resources on
education. Important questions are whether
these higher educational budgets are sustain-
able in the future and also whether they are
adequate for meeting the current responsibili-
ties of districts for delivering services.
The block grant system, which gives district
decisionmakers latitude to pursue their local
goals with funds that are not restricted to one
particular use, offers no guarantees. Local
decisionmakers may choose to spend most of
their transfers and own revenues on those
budget items that are likely to have a quicker
and more stimulating effect on the local econ-
omy than on education. Indeed, this desire of
local politicians to obtain quick returns for
public spending, coupled with the inability of
districts, being limited labor markets, to cap-
ture fully the human capital benefits of educat-
ing their children, may make investing in
educational development unappealing to them.
On the other hand, local leaders may be driven
to invest in education by the desire of local
voters for more and better schools or by the
fact that schools provide local employment or
that schools can be a source of prestige for the
community and its leaders. In a decentralized
setting, the outcome of these factors is uncer-
tain, since the allocation is the result of a mix-
ture of allocation formulae and procedures

69
Education Sector Review
and, in very large part, on the willingness of
the regions to invest in education.
Recent legislation attempts to secure a greater
slice of the country’s revenue pie for educa-
tion. Education Law 20/2003 stipulates that a
minimum of 20 percent of the central APBN
budget, exclusive of salary costs, and 20 per-
cent of the districts’ APBD budgets, also ex-
clusive of salaries, must be allocated to
education. Including salaries, districts now
spend on average about 40 percent of their
APBD budgets on education. Excluding sala-
ries, they spend less than 10 percent (assuming
that salaries are a modest 80 percent of educa-
tion spending out of APBD resources) or less
than one-half of what is stipulated in the Edu-
cation Law. To double the share of education
spending in APBD net salaries, districts will
need to make significant reductions in the
shares of other sectors, which may or may not
be politically possible.
Earmarking 20 percent of the APBN when the
MoNE is supposed to have devolved most of
its functions to local governments may be
well-intentioned but has disadvantages. It puts
pressure on the MoNE to develop its own
spending programs in the regions, which
would mean that most of the capital invest-
ments in education would be outside the con-
trol of district governments. The experience
of other countries shows that this kind of ear-
marking often leads to more spending but not
necessarily better outcomes because these cen-
trally-initiated interventions guarantee the
provision of funds regardless of regional per-
formance and creates multiple opportunities
for corruption. A big challenge is to ensure
that earmarked national and local education
budgets are indeed spent on schools and stu-
dents, that they cover the basic operating ex-
penses of schools besides the costs of teaching
and non-teaching staff (such as instructional
supplies, the routine activities of the school
committee, the maintenance of a school data-
base, the dissemination of information to par-
ents and the community, utilities, and light
repair of the school buildings and other main-
tenance) and their career development activi-
ties.
It is useful to review some evidence from
other countries about what happens to the level
of funding for education after decentralization
70
Volume 2
as a way of anticipating issues that may arise
also in Indonesia. In Brazil, the “municipali-
zation” of education resulted in a net loss of
$2.7 billion in total public education spending.
Between 1988 and 1991, spending on educa-
tion at the federal level dropped by about one-
half, state-level spending remained approxi-
mately the same, and spending in municipali-
ties rose by one-third but not by enough to
compensate for the decline in federal spending
(Workman, 1997 cited in Behrman, Deola-
likar, and Soon, 2002). In contrast, in Argen-
tina, total spending on education increased
with decentralization, but in Mexico, it did
not. Given the educational challenges facing
Indonesia, a reduction in education spending
in the next few years, especially in the wake of
the financial crisis, would certainly set the
country back with respect to educational de-
velopment.
So besides the earmarking stipulated by Edu-
cation Law 20/2003, what policies would en-
courage the regions to keep up education
spending? Given that DAU allocations are the
dominant means of transferring resources, the
key challenge is to encourage provinces and
districts to spend these block grants in a par-
ticular way (in other words, on education)
without relying on earmarking restrictions that
can undermine the autonomy of provincial and
district governments. Chapter 1 of this volume
discussed the intention of the central govern-
ment to enter into agreements with provincial
and district governments on their obligatory
functions and on minimum service standards
as a way of influencing the expenditure
choices of local leaders. There have been sig-
nificant developments and some pilot projects
related to these agreements in the past year;
within the MoNE, the unit charged with this
responsibility is Unit Fasilitasi. But these
compacts are not enforceable unless the central
government has enough information to moni-
tor the financial choices that provincial and
district governments make, and such an infor-
mation system has not yet been built.
Another option for ensuring that regional gov-
ernments spend enough on education is for the
central government to make transfers condi-
tional on the money being spent on basic edu-
cation services. The DAK allocation, which
requires matching funds, has a lot of potential
for stimulating essential education investments
Chapter 2
if the central government uses it to leverage
capital expenditures that will yield high bene-
fits for education.
In sum, legislation has expanded the revenue-
raising ability of district governments, and
regulations are allowing them to determine
their own financial management, accounting,
and procurement systems within broad guide-
lines. That district-level spending now domi-
nates the country’s education expenditures is
seen in Figure 2.2. These are reforms that are
fully consistent with the goal of devolving de-
cisionmaking authority and accountability to
regional governments. However, the effects of
this new authority are undermined by the fact
that the funding system remains too diverse
and fragmented, with separate agencies admin-
istering the relevant budgets at the national
level. During field visits made for this report,
regional education officials in Yogyakarta and
Central Java expressed some degree of frustra-
tion at not having a clear sense of the total
level of resources that are actually available
for education or of the total amount actually
being spent per pupil. Without information
and without transparency, it is very difficult to
plan ahead, to develop coherent and effective
educational programs, and to monitor and as-
sess the flow of funds through the system.22
Private Spending for Education
Remains Low
Households, communities, and private organi-
zations spend out of their own pockets to fi-
nance education in Indonesia in addition to the
resources spent by governments. Schools re-
ceive revenues in the form of BP3 contribu-
tions and other donations from parents, private
foundations, and NGOs. Students pay a vari-
ety of school fees, including monthly tuition
fees, entrance fees for new students, term and
final test fees, and extra-curriculum fees.
These fees together constitute a substantial
contribution to the income of any school, pri-
marily to its non-salary expenditures, which
usually account for about one-fifth to one-
tenth of a school’s budget. According to one
22
This is not a new phenomenon. It was noted in World
Bank, 1998 (Education in Indonesia: From Crisis to Re-
covery) that essential information on the budget is “scat-
tered among five different ministries,” making the
management of the education system a very difficult
task.
71
Financing Education under Decentralization
Figure 2.2 Education Expenditures, 2001
Central
Recurrent
LG Capital
Expenditures
Expenditures
(APBN)
(APBD)
12%
6% Central Capit
Expendit ure
(APBN) 18%
Province
Recurrent
Expendit ures
LG Recurrent (APBD) 1%
Expendit ures
(APBD) Province Capital
60% Expenditures
(APBD)
3%
Source: Ministry of Finance, SIKD data.
estimate, fees contribute as much as one-third
of total primary school revenues that are not
allocated to salaries (McMahon and Suwary-
ani, 2002).23
Education expenditures in households that
have children of school age, on average, ac-
counted for 3.4 percent of these households’
total expenditures and 8.5 percent of their non-
food expenditures in 2002 (Table 2.2).24 On
average, these households spent Rp 341,654
that year. However, there was a wide differ-
ence in such expenditures between poor and
non-poor households. Households in the
poorest quintile (with young children) spent
1.8 percent of their total expenditures (or 6.4
percent of their non-food expenditures) on
education, while those in the richest quintile
spent 4.6 percent (or 9.0 of their non-food ex-
penditures) on average.
To what extent should school finance depend
on students and the local community for sup-
port? There are opposing views on this. On
the one hand, there is some evidence that those
23
A similar situation prevailed a decade ago when public
schools obtained 92 percent of their total (salary and non-
salary) funding from government allocations. However,
there was considerable diversity among regions. In Ja-
karta, public schools depended on government resources
for only 70 percent of their total budget, while in other
parts of the country, public schools depended on the gov-
ernment for more than 90 percent of their budgets (King,
1997).
24
Moreover, this pattern is similar to the situation that
prevailed in 2000 when education accounted for 1.9 per-
cent of households’ total expenditures and 7.1 percent of
their non-food expenditures (SUSENAS data).
Education Sector Review Volume 2

Table 2.2 Household expenditures on education, by income quintile, 2002

Income quintile Mean annual Coefficient of % share in total % share in household non-
expenditures variation household consump- food consumption
(Rp) tion

All 341 654 1.90 3.4 (1.2) 8.5 (2.5)

Poorest 75 656 4.43 1.8 (2.1) 6.4 (5.8)
2 126 713 1.67 2.1 (2.8) 7.3 (7.5)
3 195 455 1.48 2.5 (3.2) 8.0 (8.4)
4 325 833 1.38 3.0 (3.8) 8.7 (8.9)
Richest 1021 451 1.30 4.6 (5.2) 9.0 (10.1)

Notes: Data from the 2002 SUSENAS; standard deviations in parentheses.

schools that rely more on parental or other lo-
cal sources of finance are more likely to oper-
ate efficiently (Bray, 1997; Jimenez and
Paqueo, 1996; and James, King, and Suryadi,
1996). People who pay at least small amounts
of their money directly for services come to
value those services more highly than when
the services are given away free.
On the other hand, schools produce benefits to
society that are wider than the private benefits
that accrue to the local community, so there
are good reasons for society as a whole to sub-
sidize at least some of the costs of local
schools. In addition, direct and indirect costs
of education can deter poor households from
sending their children to school. During the
recent financial crisis, school revenues de-
creased in real terms by as much as one-third
because of the drop in the real values of fees
and government subsidies as well as an in-
crease in the non-payment of fees (Jones and
Hagul, 2001). In the various sites that were
visited for this study, it seemed common for
schools to exempt those who could not afford
the fees, even in cases where the fees were
quite low.

Box 2.1 Unequal Education Spending among Districts

How can an effective and equitable financing system be created within the prevailing legal and regulatory frame-
work in Indonesia? A component of the technical assistance project Capacity Building for Decentralized Social
Services Delivery (DSSD) of the Asian Development Bank has been studying alternatives for improving the allo-
cation of resources to schools in three pilot districts. In these districts, the project has established a School Opera-
tion Fund (Biaya Operasion Sekola or BOS) to consolidate all resources available for financing school operations
from the district APBD and from central programs (DSSD, 2002). This is a mechanism for addressing a key
shortcoming of the current grants system—extremely fragmented sources of funds. The project stressed the impor-
tance of elaborating a formula to allocate the total BOS funding to schools and to use APBD funds to “balance” all
other funds. The rationale behind this approach is that, when schools are funded from national-level programs,
there is more likely to be a mismatch between the needs of individual schools and the “one-size-fit-all” approach
of the central programs and a lack of coordination that may result in some schools repeatedly receiving resources
while others are excluded from all schemes.
The three pilot districts for the project – Magelang, Purworejo, and Lampung Barat – are very diverse with respect
to financing, as shown by their per capita education budget using their APBD allocations. Purworejo, which allo-
cates 52 percent of its APBD grant to education, has a per capita education budget that is less than one-half of Ma-
gelang’s which devotes 37 percent of its APBD grant to education. Lampung Barat, which allocates 41 percent to
education, has an even lower budget. And since regions do not control civil service pay, it is important to look at
the proportion of their education allocation devoted to development and non-salary routine expenditures over
which they do have discretion. The disparities among the three districts are even more pronounced in this respect:
Purworejo’s discretionary education budget is one-third that of Lampung Barat and only one-fifth that of Mage-
lang’s. In all three districts, however, an overwhelming share of the education grant (79 percent to 94 percent) is
spent on salaries. Lastly, another critical statistic is the fraction of the non-salary education expenditures that
reaches schools directly. As a share of the total education allocation from APBD, this is miniscule, less than 5 per-
cent in Magelang, 6 percent in Lampung Barat, and less than 2 percent in Purworejo.

72
Chapter 2 Financing Education under Decentralization

Equitable Financing in an Unequal Figure 2.3 Enrollment Rates of Children Ages 13-
15, By Province
World
The trend towards local resource mobilization, Yogyakarta
Jakarta
as discussed above, risks widening the dispari- North Sumatera
East Kalimantan
ties between those districts that have a strong West Sumatera
Riau
revenue base and those that are less prosper- Lampung
Bali

ous. (An example of such wide disparities is Central Java

Jambi
given in Box 2.1.) Consider an extreme hypo- East Java
Bengkulu
thetical case in which district governments Central Kalimantan
SE Sulawesi
must depend entirely on their own revenues West Java
West Kalimantan
and do not receive any intergovernmental North Sulawesi
South Sumatera
transfers. In such a system, there would be no N.T. Barat
South Kalimantan
mechanism for the national government to nar- N.T. Timur
Central Sulawesi
row disparities among districts. Even if dis- South Sulawesi

tricts themselves were to adopt equalizing 60 70 80 90 100

policies within their areas, this would elimi- Source: Susenas 1998 and 2002
nate only within-district disparities and not be- Notes: Figure reflects provincial divisions in 1998; the prov-
tween-district disparities. Currently in inces of Aceh, Irian Jaya, Maluku and North Maluku have
Indonesia, districts receive twice as many re- been excluded because their sample sizes in 2002 were very
sources from intergovernmental transfers as much smaller and limited than in 1998.
from their own revenues, so if transfers are
used judiciously, they can be a powerful Table 2.3 Source of inequality in enrollment rates:
Between and within provinces
mechanism for reducing regional inequali-
Junior sec- Senior sec-
ties.25 Source Primary ondary ondary

Between 46.0 34.9 27.4

Enrollment rates vary widely across Indone- 1997
Within 54.0 65.1 72.6
sia’s provinces, with as much as a 25- percent-
age point difference between Yogyakarta and Between 43.0 31.6 25.6
1998
South Sulawesi (Figure 2.3). Yet an even lar- Within 57.0 68.4 74.4
ger variation exists among districts throughout Between 38.5 33.5 28.6
the country. Looking back over data covering 1999
Within 61.5 66.5 71.4
the past six years, the source of inequality has
Between 31.8 30.6 25.4
shifted towards within-province rather than be- 2000
tween-province variation (Table 2.3). Indeed, Within 68.2 69.4 74.6
especially at the basic education levels, there Between 27.1 27.3 27.3
was a notable jump in within-province ine- 2001
Within 72.9 72.7 72.7
quality after 1999. In the case of junior sec- Between 30.5 29.2 27.5
ondary education where the coefficient of 2002
Within 69.5 70.8 72.5
variation of enrollment rates ranged from 22 to Source: Various years of SUSENAS.
28 percent, the variation was increasingly due
also to differences within provinces. This pat- tern of educational inequality suggests that, if
the current formula for allocating transfers to
districts were able to redress the inequalities
25
There are dangers to watch out for, however. Taken to among districts, then it would have a major
an extreme, a system with intergovernmental transfers (a impact on equalizing educational development
centralized system being one) creates its own problems
in that, if richer regions are taxed high enough and a
across the country.
large proportion of those tax revenues are transferred to
poorer regions, it could induce both the rich and the poor How then are education resources distributed
to migrate to the more lightly taxed, more highly subsi- across districts? To illustrate the need for
dized jurisdictions, thus causing overcrowding in those
policymakers to devote more attention to eq-
areas” (Prud’homme, 1995). The conclusion from most
analytical and empirical research is that “any reduction in uity concerns, Figure 2.4 presents two concen-
the importance of national budgets relative to those at the tration curves for the distribution of APBD
subnational level … increases interjurisdictional dispari- and APBN expenditures for education among
ties by reducing the impact of national policies designed
to correct regional inequities” (Prud’homme, 1995).

73
Education Sector Review Volume 2

Figure 2.4 Inequality in the distribution of 2001 education expenditures

from APBD and APBN allocations

Expenditure Concentration Curves

Districts Sorted by Mean Income
100%

80% Education
Development from
APBD by Kabupaten,
Cum % Budget

2001
60%

Education
40% Development from
APBN, 2001

20%

Education
Development from
0% APBN, 2001 without
0% 20% 40% 60% 80% 100% Jakarta
Cumulative Percent of Population

Expenditure Concentration Curves

Districts Sorted by 2001 Junior Secondary Enrollment

100%
Education
Development from
80% APBD by Kabupaten,
2001
Cum % Budget

60%
Education
Development from
40% APBN, 2001
including Jakarta

20% Education
Development from
APBN, 2001
0%
0% 20% 40% 60% 80% 100%
Cumulative % population

Note: Note that perfect equality would be represented as a 45 degree line.

74
Chapter 2
Table 2.4 Determinants of Education Expenditures using APBD: Results from Regression Analysis
Total per student Per student routine
Variables expenditures [a] expenditures
Fiscal capacity (Rp tril) 0.798 (1.84) 0.334 (0.77)
Population (mil) -0.566 (-4.22) -0.429 (-3.22)
Land area (sq km) -4.169 (-0.88) -7.817 (-1.66)
Poverty [b] 407.43 (1.36) 378.72 (1.27)
Notes: t-values are in parentheses. [a] Education data used pertain to APBD routine and development expenditures,
2002. A fixed-effects model was estimated to take into account unobserved sources variation within each province. [b]
Poverty as measured by the size of the population with incomes below a poverty threshold. Regressions using GDP per
capita, 1999, as an indicator of poverty yield similar results.
Source: Population data for 2000 from BPS website.
districts in 2001.26 These curves were obtained
by ranking districts from lowest to highest ac-
cording to their mean income levels and ac-
cording to their junior secondary education
enrollment rates and then plotting their APBD
and APBN education shares against their share
of the country’s population. The diagonal line
is the line of equality—a line showing that any
given proportion of the population receives
exactly that share of education resources.
The estimated concentration curves indicate
that the district and central education expendi-
tures, exclusive of spending in Jakarta, are un-
equally allocated with respect to income
levels, but that APBN expenditures, exclusive
of Jakarta spending, are more equally distrib-
uted than APBD expenditures. With respect
to enrollment rates, both types of expenditures
are fairly equally distributed among districts,
with a slight concentration in districts in the
middle of the enrollment distribution. When
APBN expenditures in Jakarta are taken into
account, expenditures are overwhelmingly
concentrated in Jakarta, as shown by the
curves that are farthest from the diagonal line.
As already mentioned, the DAU transfer for-
mula takes into account the fiscal capacities
and needs of district governments. Because of
26
Concentration curves plot the proportion of total ex-
penditures that is received by a given proportion of the
population. The 45-degree line is the line of equality, in-
dicating, for example, that 10 percent of total expenditure
is received by 10 percent of the population, that 20 per-
cent of total expenditure is received by 20 percent of the
population, and so on. The farther away a concentration
curve is from the 45-degree line, the more unequal is the
distribution of expenditure.
75
Financing Education under Decentralization
% share of education ex-
Per student devel- penditures in total DAU
opment expenditures allocation
0.554 (7.33) 364.19 (1.83)
-0.143 (-6.77) 60.04 (0.98)
3.582 ( 4.25) -2189.21 (-1.03)
22.76 (0.46) -1498.56 (-0.01)
this equalization scheme, regardless of which
measure of expenditure needs is used, the
variation in potential revenues was lower after
total DAU allocations were incorporated
(Lewis 2001). Those district governments
with more land and more poverty tend to re-
ceive higher per capita DAU transfers,
whereas those with larger populations tend to
receive smaller per capita transfers, perhaps
because large economies of scale are likely.
There is no such formula telling districts how
much of their revenues should be allocated to
education, only the aforementioned earmark-
ing established by legislation. But do district
governments nevertheless use similar factors
as the central authority to determine their
budget allocation for education?
For this report, we estimated a statistical rela-
tionship to examine the factors that affect dis-
trict-level education spending. Using different
measures of education spending (from the
2002 APBD allocation) as the dependent vari-
able in a multivariate regression analysis and
factors similar to those used in the DAU for-
mula, we obtain the following results (Table
2.4): (i) Districts with a larger population tend
to have smaller per capita allocations for edu-
cation, which suggests also economies of scale
in the provision of services; this result is statis-
tically significant. (ii) Districts with greater
fiscal capacity tend to make larger per-student
capital investments in education. (iii) Districts
with more (or less) poverty, as measured by
the proportion of the population below a cer-
tain poverty threshold, do not have larger (or
smaller) per-student education allocations than
other districts. This result suggests that, al-
though poorer districts may receive a higher
DAU allocation by virtue of the DAU transfer
Education Sector Review
formula, the same districts do not necessarily
spend a larger proportion of it on education. In
a decentralized setting, central mandates be-
come less and less effective, and so the central
government must turn to powerful incentives
to compel local governments to behave in a
desired manner. Brazil provides a good ex-
ample of this (Box 2.2).
In sum, the inequalities among districts pre-
date decentralization, but decentralization
could exacerbate them. Transferring fiscal re-
sponsibilities to local areas and a growing reli-
ance on local resources and expertise is likely
to widen educational gaps between those areas
that have a strong revenue base and those that
are less prosperous, while weakening the cen-
tral government’s ability to close education
gaps between the richest and poorest areas.
Extreme regional differences signal the need to
establish an effective equalization mechanism.
Increasing Efficiency under
Decentralization
Enhance Local Capacity to Manage
Financial Resources
While resources are important to sustain the
educational progress achieved by Indonesia,
higher spending alone does not guarantee bet-
ter education outcomes. A critical bottleneck
in implementing the decentralized functions of
regional governments is often a shortage of
sufficient technical and managerial expertise.
In addition, the lack of viable and coordinated
management systems that link the operations
of central agencies to local governments and
schools exacerbate the problems that arise
from weak local capacity. With the new func-
tion assignments under decentralization, all
levels of government are effectively mandated
to train (or retrain) staff in financial planning
and budgeting, personnel management, infor-
mation collection and communication, among
others. Given the collective inexperience with
decentralized management, these skills are
likely to be acquired not only through formal
training but also through learning-by-doing
within an enabling environment. For instance,
local capacity for financial management is
challenged and stimulated by changing the
manner in which funds are provided to the dis-
tricts.
76
Volume 2
What can the central government do to engen-
der local capacity? It can: (i) Disclose the
amount of funds and other assistance that re-
gional governments can expect to receive well
before the beginning of each school year to
give them a chance to finalize their spending
plans and to mobilize additional resources, as
needed. (ii) Give local governments more of
their resources through block transfers, rather
than through centrally-initiated and centrally-
managed projects. Indeed, the greater the
share of resources that are coursed through this
channel rather than through specific programs,
the stronger the support for developing local
capacity for governance and management.
There is some concern that local governments
and schools, lacking experience and skills in
managing considerable discretionary funds,
will use those funds inappropriately.
It is feared that corruption and fraud in the ab-
sence of effective controls and audits will
waste valuable resources and thus erode past
educational gains.27 These problems are exac-
erbated by the fact that district governments
and schools receive funding from a number of
different sources, often too many for them to
keep track of, all with different management
arrangements.28 Because of the fragmented
nature of the funding allocations at the local
level in Indonesia, it is almost impossible for
the ultimate beneficiary (the school or the stu-
dent) to know how much funding they are
supposed to receive and whether the funds
have been released.
These are legitimate concerns, but the appro-
priate response is not to re-centralize financial
management. Rather, they call for establish-
ing better accountability mechanisms —
27
Focus-group meetings with teachers, principals, and
district officials undertaken as part of this report indicate
that decentralization, while mostly a positive change, has
created more opportunities for bribery and corrupt prac-
tices. Bribes in money or kind are said to be more costly,
processes often take longer than before, and the distribu-
tion of grants, scholarships, and other school funds is
particularly vulnerable to corruption.
28
This is not a new phenomenon. It was noted in World
Bank’s report “Education in Indonesia: From Crisis to
Recovery” (World Bank, 1998) that essential information
on the budget is “scattered among five different minis-
tries,” making the management of the education system a
very difficult task.
Chapter 2 Financing Education under Decentralization

Box 2.2 Brazil’s Experience with Municipalization

During the period of 1996-1998, the Government of Brazil carried out a comprehensive educational policy
reform. A new national educational law, enacted in 1996, laid out new roles and responsibilities for all levels
of government, and introduced a simple mechanism that links resources to student enrollment, thus creating a
powerful incentive for schools to raise enrollments. This financing mechanism, called the Fundo de
Manutenção e Desenvolvimento do Ensino Fundamental e de Valorização do Magistério (FUNDEF), revolu-
tionized the financing mechanism for sub-national governments by addressing the divergence between re-
source needs and revenue availability for education. The 1988 Constitution tied 25 percent of state and
municipal government expenditures to education, but a constitutional amendment in 1996 raised this to 60
percent for basic education (grades 1-8). In addition, it created a new mechanism to distribute tax collection
among states and municipalities. Each state, then, has its own FUNDEF, which corresponds to 15 percent of
revenue collection from specific tax and transfer sources. The total revenue collected within a given state, in-
cluding tax revenue from the state and its municipalities, is divided according to the total population of stu-
dents enrolled in that State within the previous academic year. The amount per student is then multiplied by
the current number of students enrolled within each sub-national government and distributed accordingly.
According to this new financing mechanism, each sub-national government contributes a certain amount of
resources to FUNDEF based mainly on their tax revenue per student, but receives a different amount based
on the current number of students they have enrolled in their respective basic education systems.

State and municipal governments are obligated to contribute a certain earmarked proportion of their revenues
to the FUNDEF fund for each state; the resources are then distributed to the state and each of the municipal
governments in that state on the basis of the number of primary education students enrolled by the respective
education systems managed by the sub-national entities. As each sub-national government contributes to
FUNDEF but receives money from the fund only according to its number of enrolled students, the new legis-
lation created an incentive for sub-national governments to enroll as many primary education students as pos-
sible.

Some municipalities have done much better than others in making use of the additional resources that they
have received. These municipalities have invested adequately in upgrading and rationalizing school infra-
structure, instituted transportation services for children, improved the quality of teachers, and provided them
with greater administrative and pedagogical support. At the same time, some municipalities still lack a coher-
ent educational policy, and learning is poor. Municipalities that have received additional resources due to
FUNDEF have maintained their own contributions to educational expenditures. The fungibility of resources
means that municipalities may reduce their own expenditures when they receive additional transferred re-
sources. However, the opportunities for such reductions have been limited because municipalities have faced
increased expenditure requirements for pre-school education, which does not benefit from FUNDEF re-
sources. Pre-school education suffered a temporary setback as states stopped spending on this level of educa-
tion as enjoined by the constitutional amendment of 1996 that established the FUNDEF mechanism.
However, municipalities have since picked up the reduction in state enrollments, leading to increase in the
coverage of pre-school education.

Among its significant contributions, FUNDEF created new administrative and teaching incentives within the
basic education system. Most importantly, it promoted an increase in enrollment pervasive across sub-
national governments. “As each sub-national government contributes to FUNDEF, but obtains receipts from
the fund only to the extent that is has enrolled students, the new legislation created an incentive to sub-
national governments to enroll as many primary education students as possible” (World Bank, 2002). In addi-
tion to the administrative incentive to expand access, legislation also specified that states and municipalities
spend a minimum of 60 percent of their FUNDEF funds on the payment of salaries of teachers and others in-
volved in the provision of educational services. Ultimately, this centrally-driven policy helped improve re-
gional disparities in terms of teacher salaries and subsequently of teacher profiles.

Source: World Bank 2002. “Brazil. Municipal Education Resources, Incentives, and Results.”

defining performance standards and measures, Standards and information are very important
developing checklists of basic standards and in increasing transparency and compliance
competencies, auditing current capacity and with policies, regulations, and laws and in re-
performance on the basis of those checklists. ducing corruption at all levels of the system.

77
Education Sector Review
Having access to accurate and timely informa-
tion helps district governments to plan and
manage the system, and sharing the informa-
tion with local stakeholders, such as parents,
through periodic reports may press district of-
ficials to be more transparent and efficient.
The government has promulgated several key
regulations governing information flows under
decentralization. The PP11/2001 on Regional
Financial Information provides for a compre-
hensive information system to be developed to
link national and district decisionmakers. It
obliges sub-national governments to submit
specified information to both the MoF and the
MoHA, thus giving national agencies the nec-
essary data to develop a nationwide perform-
ance and financial monitoring system. A
further regulation is needed to require schools
to feed data back to district governments.
With improved accountability, it is possible to
use the potential ability of district govern-
ments and schools to use public funds where
they are most needed and where they can have
the greatest educational impact.
Spend Productively
Improving the efficiency of the education sys-
tem requires spending educational resources
where they are most productive. This is not in
any way a concern that is unique to the decen-
tralized reform. However, with responsible
parties spending more autonomously than be-
fore, it has become more difficult to coordi-
nate the balance in the composition of
expenditures throughout the education system.
Consider that in the system as a whole, three-
quarters of resources are spent on recurrent
items, mostly on salaries and benefits and a
small amount on operational costs and peda-
gogical supplies, and one-quarter is spent on
capital outlays (Figure 2.2 above). This pat-
tern is more extreme at the district level, where
governments spend more than 90 percent of
their education budgets on routine expendi-
tures; in 2002, 95 percent of their routine
budgets was spent on the salaries of teachers at
the primary and junior secondary levels and
other personnel (McMahon and Suwaryani,
2002 and Clark et al, 1998).29 In contrast, the
29
Article 49 of the new Education Law states that the
salaries of teachers and personnel appointed by the cen-
78
Volume 2
resources that are spent on the actual opera-
tions and maintenance of schools tend to be
very limited. Often, even the tiny share left
over for development expenditures, which is
supposed to be devoted to building new class-
rooms, repairing school facilities, and teacher
training, is used to cover routine expenditures,
especially staff salaries.
With such a minute share of education re-
sources going to development expenditures, is
it possible to achieve needed improvements in
the quality of education? Teachers do play the
key role in the teaching process, as is dis-
cussed in the next two chapters, but adequate
resources need to be devoted not only to sala-
ries but also to teacher professional develop-
ment and classroom supplies.
Spend Locally
The impact of the current reform will depend
ultimately on how much of the fiscal resources
allocated to education actually reach the
schools and, within the schools, how those re-
sources are put to use. Some issues are:
First, the level of funds available for education
within a district needs to be predictable and
assured and should be closely linked to educa-
tion plans and standards at the national level
that have been discussed and negotiated with
local stakeholders. It is also important to have
clear, well-understood rules for allocating
these funds to schools so that schools know
the level of funding to expect each year from
the government at the beginning of each
school year. (Box 2.3) Schools in Indonesia
receive funding from a number of sources, of-
ten too many for the schools to keep track of
them all. These sources include public monies
from as many as seven channels, all with dif-
ferent management arrangements. During fo-
cus-group meetings for this report, school
principals complained that the lack of trans-
parency about budget allocations at the central
and district levels prevents them from predict-
ing how much revenue they will receive ex-
cept through fees collected at the school level
and makes it impossible for them to do any
tral government will be paid out of the national budget,
the APBN. Presumably, the teachers and personnel
whose salaries were transferred to the districts as part of
the decentralization reform will continue to be paid under
the local budgets, the APBD.
Chapter 2
multi-year improvement planning. In several
countries, the amount of funds allocated to
schools is based on the number of students ex-
pected to enroll in the school by means of an
agreed-upon cost-indexed per student alloca-
tion. This per-student cost is defined on the
basis of delivery of an acceptable standard of
service, which directly links the subsidies that
the school receives to its educational quality
and performance. The alternative, allocating
equal resources to each school regardless of
the number of pupils, gives schools no incen-
tive to achieve cost-effective pupil-teacher ra-
tios.. A formula-based allocation is equitable
in that every student is allocated an equal
amount of cost-indexed funds, but does not
preclude MoNE or the district governments
from establishing mechanisms for mitigating
specific inequalities among communities and
schools.30 This compensatory or equalizing
role is essential since communities are not
equal in their ability to mobilize extra re-
sources for their schools and schools are not
equal in the educational challenges that they
have to face every day. District governments
should target these additional grants to schools
that are unable to mobilize sufficient resources
to meet minimum quality standards, but the
government should do so only in conjunction
with greater supervision of those schools and
performance evaluation against agreed-upon
indicators of progress.
Second, there must be a free exchange of in-
formation between the levels of government
and schools, and the data that are exchanged
must be accurate. Obviously, accurate enroll-
ment numbers are essential. Many students
who will drop out tend to do so soon after the
start of the school year, so school subsidies
must be based not on enrollment at the begin-
ning of the year but on average daily atten-
30
In the U.S., under most equalization programs, poor
school districts experience increased spending, but some
poor school districts actually receive lower per-pupil
school spending under equalization programs that at-
tempts to level spending down a lot (Hoxby 2001).
Hoxby suggests that it is possible to minimize the nega-
tive effects of school finance equalization by combining
elements of categorical aid with property taxes. This
could mean redistributing grants among school districts
on the basis of their characteristics such as mean house-
hold income, poverty rate, and/or demographic variables,
such as the proportion of children who live in single-
parent families.
79
Financing Education under Decentralization
dance later in the year. It is also essential to
track how much of each school’s allocation is
actually received by the school and how much
goes astray. If schools provide appropriate
and timely information to the various levels of
government, this will help government per-
sonnel to plan and administer schools. Schools
should also provide this information to local
stakeholders such as parents, who can then use
this information to press district officials to be
more transparent and efficient.
Third, the capacity within schools for devel-
opment planning, budget preparation and exe-
cution, and accounting also determines how
well they are able to use the decentralized fis-
cal structure to their advantage and how effi-
ciently they are able to spend the resources
allocated to them. The largest single subsidy
to schools is in the form of teacher and staff
salaries, which means that schools’ discretion-
ary budgets are often quite limited.
As districts and communities mobilize greater
resources to cover non-salary expenditures that
improve schools, they will need the skills nec-
essary for preparing and implementing school
improvement plans. Past studies have sug-
gested that the benefits of decentralization are
more likely to emerge when school councils
are able to exercise some autonomy over ad-
ministrative and financial matters related to
the school (Reithwood and Menzies, 1998,
Jimenez and Sawada, 1999 and King and
Ozler, 2000). School Committees in Indonesia
have yet to be given clear functions and have
yet to take advantage of their supposed greater
autonomy. As school “governors,” these
Committees will need to make the hard deci-
sions about how to spend school revenues.
Education Sector Review Volume 2

Box 2.3 School Funding – A Gap in Financial Policy

The mechanisms of finance under decentralization are still faulty, confusing, or absent (see McMahon and
Boediono, 2001). One critical gap has to do with school funding. The simplest possible school funding sys-
tem would disburse all of the resources to each school on a per student basis rather than just providing it with
inputs. In such a funding system, as most of the funding would be given on a block basis, the tasks of finan-
cial management would be relatively simple, and keeping track of the funding would be relatively easy.
However, such a system may not be possible for a long time in Indonesia, at least for all schools. There may
be valid reasons not to adopt such a system at this point, and there may also be other reasons that are related
to inertia and tradition. A compromise would be to introduce this system on an “asymmetrical” basis, in
other words, only in those schools that already have financial planning capacity.
In the absence of such a system, there are likely to be various different sources of funding at the school level,
many of them earmarked, and some of the funding will take the form of providing inputs rather than money.
In this situation, the main task would be to develop a set of accounting tools and tracking systems at the na-
tional level that can follow (both budgeted and actual) expenditures down to the school level and can aggre-
gate all forms of expenditure, including inputs, for each school. Two or three months before the beginning of
any school year, each district government should inform each school of the school’s total expenditure in the
most recent year available (there should be enough time to close the books so that final expenditure figures
could be reported), its estimated expenditure in the previous year, and its allotted budget for the current year.
This report should be as detailed as possible and should include a breakdown of items into those that were
merely inputs and those that were an actual financial transfer to the school. The report should also inform the
school (and its committee) of its per student expenditure and those of similar schools so the school can com-
pare its expenditure with that of others. If the school’s per student spending is far above that of its peers,
then the district should make it clear that this cannot continue.
The national government can contribute by crafting a set of standards for financial management and then al-
lowing various suppliers to develop competing financial management packages for schools and districts to
purchase, as long as their software meets the functionality requirements developed by the government. Even
if only one-tenth of schools successfully computerize their financial management systems, this would still
represent an attractive market that would be difficult for software vendors to ignore. It is unlikely that gov-
ernment or donor-based financial software development would be as successful as independent software de-
velopment, but the software would be built to specified standards. One of the standards that such packages
would have to meet is complete manual-to-machine inter-operability and compatibility. The government
could then require schools to hand over the manual to other schools, thus forcing better-off schools to subsi-
dize the development of the simpler manual package for the poorer schools and making it easy for schools to
change from manual systems to computer systems without having to change their service provider.

Summary of Implications for Policy
This chapter began with the proposition that
establishing appropriate resource allocation
and accountability systems for the manage-
ment of those resources in Indonesia’s educa-
tion sector is key to increasing its effectiveness
and attaining the country’s educational goals.
This message would have applied even if In-
donesia had not embarked on its “big bang”
decentralization, but under decentralization,
the ways and forms in which these challenges
can be met have changed. Decentralization
has shifted the relative roles of different levels
of governance, from the central government
down to the regional governments and the
School Committees. At the same time, the
success or failure of the decentralization will
rest partly on how well these governance lev-
els use their discretion and autonomy over the
generation, allocation, and use of funds. Three
key messages on financing education are:
Ensure that total education expenditures are
adequate to maintain educational develop-
ment and increase the efficiency of resource
use.
This task requires strong leadership from the
central government, both in crafting an effec-
tive funding mechanism that is easy to monitor
and to implement and in building political
support for that mechanism among provincial
and district leaders. Earmarking the central
and local budgets for education, as the Consti-
tution and the Education Law have done, goes
only part of the distance to ensure that ade-
quate resources are allocated to the schools
where they can make a difference. The real
challenge is to ensure that earmarked national

80
Chapter 2
and local education budgets are indeed spent
on schools and students, that they cover the
basic operating expenses of schools besides
the costs of teaching and non-teaching staff
(such instructional supplies, the routine activi-
ties of the School Committee, maintaining a
school database and disseminating information
to parents and the community, utilities, and
light repairs of the school buildings and other
maintenance), and their development activi-
ties. Together with efforts to define a mini-
mum standard of provision, it is possible to
design a formula-based allocation that is non-
discretionary and that depends on just a few
key measurable criteria.
The Education For All effort is already an at-
tempt to estimate the per student level of
spending that would be consistent with attain-
ing universal enrollment and improving educa-
tion quality in Indonesia (McMahon, 2003).
What needs to happen is to open the proposed
formula to national scrutiny and debate in or-
der to validate it and to obtain political support
for it. What also needs to happen is to apply
the funding formula to the local processes of
allocating the DAU rather than the DAK. This
formula funding mechanism should become
the routine way to allocated education grants
in Indonesia and, in the process, it will facili-
tate school-based management by allowing
schools to manage assistance in cash rather
than in kind.
The funding formula mentioned above should
apply only to the per student level of routine
operational expenditures. However, a per-
school rather than per-student funding formula
is more appropriate in deploying teachers and
other staff to schools. In addition, many
schools in Indonesia have urgent development
needs, including staff development and the
construction of libraries or laboratories.
Richer districts will be able to undertake these
capital investments themselves, but poorer dis-
tricts will not, so a pro-poor investment pro-
gram will be needed. In fact, in the short run
(that is, until the DAU mechanism is fixed),
schools are likely to need direct cash assis-
tance, perhaps through a special DAK alloca-
tion, to cover even their basic operational
costs. This is because the current DAU alloca-
tions are not equalizing the distribution of lo-
cal resources, which means that poorer
districts repeatedly find themselves unable to
81
Financing Education under Decentralization
fulfill their responsibility to deliver education
of acceptable coverage or quality. This is evi-
dent in the strikingly wide range of per-capita
levels of education expenditures across dis-
tricts. However, a “sunset clause” should be
included in this special DAK allocation that
would ensure that it ended once the DAU
mechanism had been improved.
In addition to a national investment plan for
education, Indonesia needs a multi-year educa-
tion development plan for each region (prov-
ince and/or district) that would spell out the
education goals and the implied resource re-
quirements of those goals for each region.
This is not the same as the yearly budgeting
process to arrive at an annual budget for the
sector. What is needed is a resource plan that
is more closely linked to the educational de-
velopment goals of the region than is the case
with the yearly budgeting process, that is the
product of a broad consultation with school
stakeholders, that specifies clear performance
indicators, that identifies the different intended
sources of funds and required management
and technical skills, and that is widely publi-
cized among the various stakeholder groups in
the regions. In turn, there should be a re-
gional (provincial and/or district) multi-year
resource plan that would specify all planned
investments in the improvement of all schools
within the control of the regional government,
including investments that go beyond the con-
struction and repair of facilities. These multi-
year assistance plans to schools would not just
be expenditure plans but also financial, staff-
ing, and management plans. To formulate the
assistance plans to schools and, consequently,
the regional resource plan, what is needed is a
funding allocation formula that is based on a
cost-indexed, per-pupil basis and consensual
quality standards and region-specific prices.
It is important to have an equivalent and paral-
lel process of planning at the level of the cen-
tral government. The regional plans can be
aggregated to formulate a multi-year plan of
assistance for educational development, and
this can be achieved using the different in-
struments available to the national government
in the new decentralized context. Because the
sum of regional demands is likely to exceed
the resources available to the national gov-
ernment, districts should be categorized ac-
cording to their performance on multiple
Education Sector Review
education indicators, their resource levels
(transfers as well as own resources), and their
technical and management capacity. This cate-
gorization would make it possible for the na-
tional government to prioritize the level of
assistance that it provides to provinces or dis-
tricts. In recognition of the fact that resource
levels and technical capacities vary across dis-
tricts in Indonesia, adjustments would have to
be made in the allocation amounts that are cur-
rently given to the disadvantaged areas. Using
this categorization, it would be possible to de-
termine the notional level and nature of assis-
tance for each region. This notional level of
assistance could then be the basis for the an-
nual transfers to the regions, particularly the
DAK allocations.
Another important aspect of using perform-
ance-based or results-based funding schemes
to ensure that resources are used more effi-
ciently is that this holds regional governments
and schools ultimately accountable for meas-
urable indicators of progress within their juris-
dictions. For the central government, this
means imposing a hard budget constraint on
regional governments, refusing to bail out
those that miss their goals because of bad de-
cisions or poor implementation. At the same
time, the central government should help local
governments to build their capacity for effi-
cient planning, budgeting, and fiscal manage-
ment and to train provincial and district
officials to use data to target assistance and to
measure impact. There have been several ef-
forts in the past at improving the planning and
budgeting processes in schools and districts,
such as the DSSD program. Although these
have been fragmented efforts, and often only
pilot programs, some lessons can still be
learned from these efforts that can be used to
guide a country-wide effort to formulate edu-
cation investment and assistance plans at all
levels.
Increase the productivity and effectiveness of
resources spent on education at the provin-
cial, district, and school levels.
There are lessons from the experience of coun-
tries around the world about how to increase
the effectiveness of transfers that might be
useful to Indonesia (Bird and Smart, 2002).
First, regional governments should be required
to prepare both an adequate investment plan
82
Volume 2
and an adequate maintenance plan. Second,
the communities or schools that receive trans-
fers should be selected based on both their
needs and their capacity as well as of the eco-
nomic viability of the project in question.
Third, the central government should make
adequate technical assistance available to local
governments to help them to develop plans, ar-
range financing, and operate the local educa-
tion system as efficiently as possible. Fourth,
the central government should monitor and
evaluate the implementation of the investment
plans by requiring periodic progress reports
and by making field inspections and formal
evaluations of outcomes. Finally, all regional
governments that receive a transfer should be
required to testify about the condition of the
infrastructure on which the resources are to be
spent to enable the central government to
make an adequate assessment of the future
needs of local governments.
Because of the fragmented nature of the fund-
ing allocations at the district level in Indone-
sia, there are numerous opportunities for
corruption and leakage in the current system.
Information plays a critical role in improving
the quality of decisionmaking by policymak-
ers. Information flows are likewise important
for improving the implementation of policies
and investment programs. They help to in-
crease transparency and compliance with poli-
cies, regulations and laws and to reduce
corruption at all levels of the system. The re-
gional education investment plans discussed
above should be based on regular, systematic,
and purposive collection and analysis of edu-
cation data. Local governments are likely to
spend transfers for capital investments more
effectively if they know in advance how much
they are going to receive so they can devise a
coherent development strategy.
Similarly, it is important for schools to know
accurately and in a timely manner the size and
nature of the resources that they will be receiv-
ing so they can plan accordingly. This is diffi-
cult under the current system in which public
resources flow through many different chan-
nels, some of which are completely unpredict-
able or subject to being diverted by local
politicians. A formula-based allocation that is
non-discretionary and that depends on a few
key—and simple—pieces of information helps
to make allocations more transparent. When
Chapter 2
school committees know in advance how
much of a subsidy they are due to receive from
the regional government, they can compare
that amount with what they actually receive,
which thus serves as an effective check on cor-
ruption in local public spending.
Focus education resources on those who
need them most.
In Indonesia, as in many other developing
countries, a more pressing concern than effi-
ciency is often the inability to meet the de-
mand for services, especially the demand from
the poor and disadvantaged. Districts that
have higher enrollment rates and better quality
are frequently those with more resources,
whereas districts that have low education indi-
cators are typically also the districts with
fewer resources. To improve education out-
comes in Indonesia, it is imperative to serve
the needs of those districts that are in greater
need and to tailor the type of assistance pro-
vided to the type of need manifested. Under
decentralization, whether or not adequate re-
sources are allocated to pro-poor services de-
pends on the priorities of local leaders and
communities. This is one of the dangers of
decentralization.
83
Financing Education under Decentralization
First, as mentioned above, the DAU mecha-
nism needs to be improved so that it can help
to equalize the wide disparities in educational
outcomes across regions. Second, the central
education authority should support targeted,
pro-poor education programs, perhaps through
a DAK allocation. Indonesia’s past experience
with its large scholarship and school grants
program, launched at the onset of the recent
financial crisis, can inform the design of a tar-
geted program. To make such a program fi-
nancially sustainable, what is needed is the
political will to keep it well targeted to those
who need it most. There are valuable lessons
from around the world (for example, Bangla-
desh, Brazil, and Mexico) on how this can be
achieved. Third, the national government can
use incentives to influence the allocation deci-
sions of the better-off districts, for example, by
rewarding those districts that are able to make
large improvements in the education indicators
pertaining to the poorest communities or
schools within their jurisdiction and, con-
versely, by taxing those with worsening indi-
cators. Indonesia is very capable of doing this
type of monitoring because of its longstanding
experience with fielding large household sur-
veys, such as the SUSENAS.
Education Sector Review
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Education Sector Review Volume 2

Appendix 2.1. Cost Implications of Quality Education for All

The Education for All (EFA) goals are to in- BP3, examinations; procurement of
crease net enrollment rates at both primary textbooks, notebooks, and school bags;
and junior secondary education levels, transport; and so on. At the primary
reaching out even to the poor and disadvan- level, eliminating fees mean foregone
taged populations, and to improve the qual- revenues of Rp 13,000 per pupil in 2004
ity of education available. The cost (2003 prices), on average, increasing to
implications of these goals have been calcu- Rp 38,000 per pupil in 2008. At the jun-
lated by Professor McMahon (McMahon, ior secondary level, the amount is about
2003). A key concept for his costing is ade- Rp 57,000 per pupil.
quacy, or “what it takes in terms of text- x In addition, a student grant of Rp
books, teaching materials, teacher abilities 290,000 per pupil per year for 18.2 per-
and qualifications, school libraries, and so cent of all primary school students,
forth to produce an educationally adequate which is more than doubling the current
education for each child” (McMahon 2003). grant by the government, will cover the
McMahon’s estimates, developed on a per- opportunity costs borne by parents and
pupil basis, are based on the following as- for teacher supplements and BP3. The
sumptions, among others: corresponding grant is Rp 93,000 per
pupil per year.
x The EFA goals are to achieve 100 per-
cent net enrollment rate by 2008 in pri-
mary education and 95 percent in junior Table 1. Cost estimates for EFA
secondary education by 2008, and to as- Primary Secondary
sure that this education is of acceptable 2004/5 2008/9 2004/5 2008/9
quality. Per-pupil cost (Rp thousands)
Incremental cost 179 209 509 834
x A recently conducted survey of schools of EFA
provide data on what schools are actu- Current cost 966 966 1,449 1,449
Total 1,145 1,175 1,958 2,283
ally spending. These data provide the Total cost (=Per-pupil cost x students enrolled)
current or base cost of schools. (Rp billions)
x What the “best practice” schools are cur- Incremental cost 5,061 5,702 5,331 10,245
of EFA
rently spending is the measure of what Current cost 27,255 26,397 15,476 18,049
inputs are needed and “most cost effec- Total 32,316 32,099 20,807 28,418
tive” to improve learning in schools. The Source: McMahon (2003)
“best practice” schools, those that have Note: All estimates are in 2003 prices.
experienced increases in EBTANAS test
scores, have been found to have more The estimates per pupil for 2004/5 indicate
books and teaching materials for every that the incremental costs associated with
pupil, and salary supplements for teach- EFA would be 18 percent of the current
ers are larger. For example, in expendi- (2004) per-pupil cost at the district level for
ture terms, the average schools is primary education and 35 percent for junior
estimated to spend Rp 15,000 per pupil secondary education (Table 1). These repre-
on teaching aids while the “best practice sent a significant increase in per-pupil
schools” spend Rp 21,745 per pupil, on spending. Primary and junior secondary
average. education costs would total Rp 53 trillion in
x The corresponding cost estimate for jun- 2004. According to SIKD estimates, educa-
ior secondary education is 1.5 times the tion expenditures in 2002 were 2.4 percent
cost above for primary education. of Indonesia’s GDP at the local level, or to-
x To increase the enrollment rate of the taling about Rp 43 trillion. This spending
poor and disadvantaged population re- may well have increased close to the EFA
quires additional resources, largely for cost estimates by 2004 if education spending
the purpose of eliminating fees. Cur- increases by the same percentage as the pro-
rently, fees are charged for entrance, jected percentage increase in DAU transfers.

86
Chapter 2
Thus, while the EFA cost implications as es-
timated by McMahon (2003) will mean a
significant rise in education per-pupil spend-
ing, the implied total expenditure is not far
off from the total education expenditures al-
ready being made at the district level.
Is EFA by 2008 guaranteed then? No, by no
means is EFA guaranteed without the neces-
sary accompanying changes in the manage-
ment of schools and the education system as
a whole. Costing EFA is an important step
in understanding what is required to fulfill
this national commitment, but more re-
sources are not enough. The changes for
better quality are discussed in Chapter 3 of
this volume.
87
Financing Education under Decentralization
Lastly, there are several ways to improve the
existing EFA cost estimates while maintain-
ing the basic principles of McMahon’s esti-
mation model. Examples are: Improve the
reference used for the level of spending per
pupil needed to raise quality. The assump-
tion used was that the “best practice”
schools are not able to reduce their cost per
pupil without quality reductions (thus, that
they are at optimal efficiency). To what ex-
tent this is true would require more studies
on the gains and cost of increasing school ef-
ficiency. And improve the estimate of what
is needed to raise the enrollment of poor
youths. Impact evaluations of the national
scholarship program initiated in the late
1990s would be able to inform this.
Education Sector Review Volume 2

88
 Chapter 3: Education Quality Assurance and Improvement
The biggest challenge in the development of
national education is enhancing the quality
and relevance of education (MoNE, 2001a).
Expectations for the basic education system
are high. Parents want the system to prepare
their children for productive employment
and a moral life, while the state wants
graduates who can contribute to a growing
economy with high productivity, particularly
the types of productivity gained through par-
ticipation in the knowledge economy
(MoNE, 2000). The state also wants the so-
cial benefits associated with education –
lower birth rates, better health practices, and
more active participation of citizens in a
democratic civil society (Republic of Indo-
nesia, 2003). Achieving these goals requires
two things: that children have access to edu-
cation, preferably by attending formal
schools, and that the education they receive
is of acceptable quality. Volume I reports
that the net enrollment rates for Indonesia in
2002 were 92.7 percent for primary school-
ing and 61.7 percent for junior secondary
schooling up from 91.5 and 51.0, respec-
tively, in 1995. With these gains in enroll-
ment levels, Indonesia is now at the
historical point where countries start to em-
phasize quality as much as continued growth
in access. In Indonesia, two forces shape the
quality agenda: the increasing demand for
quality improvement from journalists and
policymakers and the political pressure of
the decentralization agenda.
Most official reports on educational quality
in Indonesia, such as the Education for All
Situational Analysis (Education for All,
2002a), express dissatisfaction with the cur-
rent level of quality and cite as evidence the
poor showing of Indonesia in the 1999
Trends in International Mathematics and
Science Study. Out of the 38 countries in-
cluded in this study, Indonesia ranked 34th in
mathematics and 32nd in science. An Indo-
nesian report in the mid-1990s stated that the
quality of the typical upper secondary
graduate declined to a level that was proba-
bly equivalent to lower secondary education
before the beginning of the rapid expansion
89
of secondary education beginning in the
1980s (Jones, 2001). Unemployment among
high school graduates is also high and re-
mained so even during the 1990s, a time of
unprecedented growth in the labor market.
In 1996, BAPPENAS published data col-
lected since 1990 on unemployment rates
among general secondary school graduates.
At that time, 25.47 percent of high school
graduates were unemployed, despite a
growth of 13.4 percent in employment op-
portunities for people with that level of edu-
cation (BAPPENAS quoted in Soedijarto,
2003). Business leaders interviewed as part
of the district consultation process for this
sector review commented that it takes high
school graduates about six months before
they are able to complete the most basic
workplace functions, such as coming to
work on time or following instructions
(SAGRIC, 2004).
Furthermore, what quality improvements
there have been so far appear to be inequita-
ble. In Chapter 2 on finance, we reported
that public spending on education barely
covers teachers’ salaries and the routine op-
erating expenses of public schools. Parents
fill this financing gap through various school
fees both in public and private schools.31 As
pointed out in Chapter 2 on financing, ine-
qualities in per-pupil spending are high, both
within districts and between districts. In
practice, this means that the schools that
serve poor children get worse and the
schools that serve higher-income children
get better (ADB, 2000).
Approach and Rationale
The previous chapters discussed the risks
and benefits inherent in decentralization and
raised general issues about the basic educa-
tion governance, management, and finance
systems that are currently being debated or
put into place in Indonesia. Implicit in those
chapters was the notion that the principles of
decentralization, if applied to the reform of
31
For affiliated private schools and madrasahs, foun-
dations sometimes provide additional support.
Education Sector Review Volume 2

education system management, governance, make it difficult to improve quality in the

and finance, will enable Indonesia to meet sector. Second, the lack of technical capac-
its goal of providing all children with nine ity at the district and school levels to imple-
years of high-quality basic education. This ment and sustain quality assurance and
favorable result is not expected to derive quality improvement programs, as evidenced
automatically from decentralization. Some failures to sustain or mainstream the major-
research warns of a decline in general qual- ity of good practices developed under pro-
ity or an inequitable rise in quality after de- jects.
centralization (Galiani and Schargrodsky,
2001), while other studies report a general Methodology
improvement in school quality (King and
The methodology for this chapter consisted
Ozler, 1998).
of a review of documents on educational
quality such as newspapers, strategic and
In this chapter, we propose a break with past
annual action plans, laws, decrees, guide-
approaches to quality management that re-
lines, background papers, policy documents,
lied on centrally managed projects. Instead,
conference presentations, and the text of
we propose an approach that: (i) links qual-
speeches from the Minister and Directors
ity assurance and quality improvement, (ii)
General of Education to capture a sense of
clearly allocates functions to specific levels
the national government’s strategic inten-
of government, (iii) incorporates quality im-
tions on the issue of quality management.
provement and assurance into the routine
Interviews with officials in the top two eche-
operations of the central government, dis-
lons of the MoNE provided us with guidance
tricts, and schools, and (iv) uses projects ju-
on how policymakers are conceptualizing
diciously as part of an overall development
future quality control and quality improve-
plan for district education. We then review
ment efforts. In additional interviews with
the quality assurance and quality improve-
the national staff and consultants responsible
ment efforts that are already in place or are
for managing the quality improvement pro-
proposed under the policy framework cur-
jects funded by the central government, we
rently being prepared by the MoNE. At the
learned about the difficulties that they face
school level, this is school-based manage-
in mainstreaming lessons learned from pro-
ment, while at the district level, it is per-
jects.
formance-based budgeting. Details on how
school-based management can be modified
We conducted two kinds of activities at the
to address the quality issue more directly
school and district levels. On field visits to
appears in Appendix 3.2. Throughout this
selected districts and schools, we inter-
chapter, we include a few international com-
viewed officials and held group discussions
parisons to illustrate how other countries
with school committee members and school
have managed the issue of improving quality
heads to gain insights into the challenges
under decentralization. The chapter con-
that they face in trying to raise quality at the
cludes with a summary of recommendations
local level under decentralization. We also
for taking a program approach to quality
organized a series of focus groups at the
management.
school and district levels to provide us with
insights into how schools and districts carry
The rationale for this program approach is
out quality control and teacher management.
that the quality of education in Indonesia is
This process included three half-day consul-
not improving for two reasons. First, the
tations with groups of 8 to 10 bupatis from
lack of political will at the central and dis-
rural and urban areas in the same province.
trict levels to tackle the quality problem as
evidenced by: the low level of public financ-
Finally, we solicited comments on an earlier
ing of schools and of the sector overall, the
draft of this chapter from Indonesian offi-
absence of formal systems of incentives for
cials at the National Evaluation Center, the
improving quality and of consequences for
Directorate for Junior Secondary Education,
not meeting minimum quality standards, and
the Basic Education Planning Division of the
an organizational structure of the MoNE and
Directorate for Primary and Secondary Edu-
personnel policies of local governments that

90
Chapter 3 Quality Assurance and Improvement

cation, and from consultants working on grams is to improve school conditions and
project evaluation and management. These raise school performance.
inputs have been incorporated into the text.
Quality assurance refers to processes for
Basic Terms guaranteeing that schools and districts meet
particular standards. The quality assurance
This chapter uses several terms that are open
activities in Indonesia have three compatible
to interpretation and have no universally ac-
goals: (i) equivalence – ensuring a basis for
cepted definition. These “terms of art” are
comparing the credentials of teachers and
briefly described below, and more complete
school graduates throughout the archipelago
explanations are given later in the chapter.
through programs that include examinations
Quality is typically defined in terms of its and certification; (ii) equity – meeting the
instrumental value in increasing students’ basic rights of even very poor children to re-
academic performance. In other words, ceive basic educational services that meet
quality is usually defined as that mix of in- minimum service standards through a pro-
puts, classroom practices, school environ- gram that holds districts accountable to na-
ment, and school organization that adds tional standards for their performance; and
value to student learning. This chapter ex- (iii) groundwork – ensuring that schools
pands that definition to include an additional have a basic minimum amount of material
intrinsic dimension to the definition of qual- and human infrastructure that is both large
ity. We take the position that children have and equitable enough to improve quality.
a basic right to attend schools that meet the Under the new Education Law (No.
minimum conditions of learning as stipu- 20/2003), the mechanisms for achieving
lated in the Education Law and that any in- these ends consist of accrediting schools,
vestments in improving the quality of certifying teachers, and setting graduation
unsafe, unhealthy schools staffed by un- requirements for post-primary students.
qualified teachers to minimum standards are
by definition investments in educational Quality Management
quality regardless of their impact on chil-
Quality management means linking quality
dren’s academic performance. Expanding
improvement and quality assurance through
the definition to include the health, safety,
a common set of standards and measures.
and welfare of students aligns this definition
Under this approach, information from peri-
of quality with Indonesia’s Education Law
odic performance evaluations guide both
and its commitment to educational quality
quality assurance and quality improvement
for all (Education for All, 2002b) as both a
activities, as illustrated in Figure 3.1 and de-
basic human right and an instrument for
scribed in Box 3.1. The new Education Law
economic and social development.
provides part of the framework for quality
assurance by establishing a body that will set
Quality improvement simply means upgrad-
national standards and evaluate perform-
ing inputs, learning environments, teaching
ance. However, the law does not specify the
practices, school organization, and school
relationship between national standards and
performance to bring them closer to the ex-
quality improvement at the district or school
pectations of both the state and parents. In
levels. In this section, we discuss progress
Indonesia, recent quality improvement pro-
and issues in setting national standards and
jects have involved training and managing
measures and in establishing a nationwide
teachers, revising curricula, providing text-
system for reporting on performance.
books, rehabilitating classrooms, supporting
school-based management, and promoting
packaged inputs both on specific subjects
(for example, the Science Education Quality
Improvement package or SEQIP) and on
modern teaching methods (for example, the
Creating Learning Communities for Chil-
dren’s “joyful learning” package or CLCC).
The purpose of quality improvement pro-

91
Education Sector Review Volume 2

Figure 3.1 Diagram of Quality Management System

QUALITY
ASSURANCE
COMPONENT

Uniform Standards Uniform Measures

Recognition for Positive

Result Correction for Negative
Result
Positive PERFORMANCE Negative
EVALUATION

Monitoring
Results Information
Based Planning
QUALITY
IMPROVEMENT
COMPONENT

Milestones Improvement
Mobilizing Resource, Plan
Implementing Plans

Box 3.1 Hypothetical Use of Performance Information in a School

A hypothetical school is evaluated by an accreditation body and is performing just at the minimum
standard level. On the quality assurance side, the school receives an incentive for performing up to
minimum standards, in this case a certificate of accreditation that carries with it certain privileges.
This certificate qualifies the school to send representatives to an annual conference of accredited
schools offered by the district. On the quality improvement side, the school uses the performance
evaluation to prepare a school improvement plan and at regular interval checks to see if it is on
course to achieve these milestones. In this case, the school evaluation shows that many grade 4
students are not able to read at the 4th grade level; so the school introduces a daily program of
30minutes of sustained silent reading for students in grades 2 and 3. Teachers from grades 4 and 5
agree to monitor the progress of the children every two months. If the program works well, the
school will make 30minutes of sustained silent reading part of their daily teaching practice.

Need for Common Ground
A quality management approach requires a set
of standards and measures to serve as common
ground for quality assurance and improve-
ment. The standards and measures must be
uniform across the education system, although
performance targets can vary to take into ac-
count differences in conditions between dis-
tricts or schools. For example, the standards
of teacher competence must be the same in,
say, Mataram, East Java and Kupang, NTT.
Likewise, the instruments used to measure
teacher competence, such as public examina-
tions on subject matter plus observed teaching
practice, must be the same in both places.
However, the scores that teachers must receive
to be certified or promoted can vary depending
on the needs and resources of each district.
A single, well-considered set of national stan-
dards is seminal in several ways. First, these
standards will be the conceptual link between
the quality assurance and quality improvement
systems, for example, by aligning school per-
formance evaluation (quality assurance) with
school development planning (quality im-
provement) to the same set of national stan-
dards. Second, the national standards will
coordinate the activities of different agencies
operating at the same levels, for example, by
focusing independent accreditation bodies and
district school inspectors on the same set of is-
sues or by focusing public and private provid-
ers of teacher training services on the same set
of competencies. Finally, as the function of
quality management has been allocated to
more than one level of government, the na-
tional standards will help to ensure that all
these different agencies carry out these quality
functions towards the same end. For exam-
ple, while the central government will be re-
sponsible for setting minimum standards for
tests of basic student competencies, districts or

92
Chapter 3
independent bodies will be responsible for de-
veloping tests that meet those standards.
Under decentralization, the central government
is responsible both for setting national stan-
dards and measures and for evaluating the per-
formance of the education system overall. The
MoNE is currently undertaking several parallel
standard-setting activities, and Figure 3.2 on
the following page contains a diagram of the
standard-setting activities begun in 2003. The
most important of these standard-setting exer-
cises are the National Education Standards for
schools, Minimum Service Standards for dis-
tricts, and Teacher Performance and Certifica-
tion Standards. Each is being developed by a
different working group, and, as yet, there is
no standing body to coordinate their activities.
The absence of a steering body on standards
has two dangers: first, that the cumulative
number of standards may be too many to man-
age and, second, that the standards being de-
veloped may not be compatible and may
therefore send different messages to teachers,
schools, and districts about what they need to
achieve. The Education Law mandates the
formation of a standardization and evaluation
body that will, among other duties, specify na-
tional education standards.32 Among its other
duties, this new body will have to coordinate
the following standard-setting activities:
32
Law No. 20/2003 Chapter IX, Article 35 and Chapter
XIV, Articles 57-59.
93
Education Quality Assurance and Improvement
1. The school accreditation body (BAS) is
setting minimum standards for the ac-
creditation of schools and is defining a
process for monitoring and improving
school quality.
2. The decentralization facilitation unit
(UFD) is working under the MoHA um-
brella to develop minimum performance
standards for the districts.
3. The national evaluation center is devel-
oping standards and tests of students’
mastery of basic competencies and the
general and subject knowledge of trainee
teachers.
4. The national curriculum center is defin-
ing basic competencies in all subject ar-
eas.
5. The textbook and academic publications
center is defining technical standards for
print and graphic teaching materials.
6. The teacher training department is de-
veloping teacher competency standards.
Until this body is established, we highly rec-
ommend forming a steering committee for
harmonizing standards.
Education Sector Review Volume 2

Figure 3.2 Relationships between Standard-setting Entities being Developed or in Effect

UNDER DEVELOPMENT OR REVISION BY CENTER

IN EFFECT
Technical Standards for Inputs
Including:
School Accreditation - Textbooks
Body (BAS) KepMen MSS (MoHA)
PP/25/00 - Local Curricula
87/U/02 School Inspection
PP/108/00 - Infrastructure
KepMen 39/O/03 KepMen20/U/98
Various KepMen

Provincial Quality Im-

provement Institutes Student Certification
KepMen 114/U/01 MSS (MoNE)
Teacher Certification (LPMP)
KepMen 87/O/03 KepMen 11/U/02 KepMen053/U/01

District Education Systems

School
Committees
KepMen
44/U/02

Public and Private General Schools and Madrasah

Students and Teachers

94
Chapter 3
Standards
Chapter 4 of this report on teacher manage-
ment discusses the standards currently being
developed for initial teacher certification and
their subsequent performance evaluations and
how these can be used in a career-long teacher
management and development program. In
this section, we discuss the National Education
Standards for schools and Minimum Service
Standards for districts.
Legal and Regulatory Basis
The 2003 Education Law devotes an entire
chapter (Chapter IX) to the issue of national
education standards. That chapter mandates
that standards be developed and codified for
educational content, process, graduation com-
petencies, teaching force, infrastructure, man-
agement, budgeting, and evaluation. It also
calls for these national standards to be the ba-
sis for developing curricula, the teaching force,
educational infrastructure, management, and
budgeting. Among the 14 regulations cur-
rently being prepared is a draft regulation
(RPP) that addresses the articles in the Educa-
tion Law on national education standards. The
draft RPP does not contain standards per se
but states that national standards should be de-
veloped, implemented, reported on, and evalu-
ated by an independent educational
standardization and assurance body that re-
ports to the Minister of Education and this in-
dependent body will organize standardization
and certification nationwide (RPP, 2003). In
the interests of public accountability and
transparency, the law requires that citizens be
given an opportunity to comment on these
draft regulations at public hearings. This
process of public hearings will begin in mid-
2004, and the independent education stan-
dardization and assurance body is not likely to
be constituted before 2005. Therefore, there is
an ample timeframe for the government to
recommend standards and standard-setting
processes for consideration.
Education Standards for Schools
The independent body mentioned above will
set standards for schools and oversee school
quality assurance. Under the legal framework,
these education standards will be used as the
basis for both a school accreditation system
and as a sector evaluation system based on
95
Quality Assurance and Improvement
school performance. The national education
standards are not at present formally linked to
the district minimum service standards that are
currently in draft form. The reason for this
lack of connection is structural; the Education
Standards will be developed by an independ-
ent body and formalized as Ministerial Decree,
while the Minimum Service Standards are be-
ing developed by MoNE technical staff under
the auspices of the Ministry of Home Affairs.33
In 2001, a Ministerial Decree34 established a
set of standards for kindergartens, primary
schools, and junior secondary schools. These
standards will be retired when the independent
body formulates the new national education
standards. The current standards have not
been effective for several reasons, principally,
because there are too many categories (eight)
and indicators (30-40) and because the guid-
ance for their implementation is burdensome.
Because the central government has not pro-
vided schools with adequate funds for training
their administrators and teachers in the use of
these standards and because the central gov-
ernment has no statutory authority to compel
districts to use them, the existing national edu-
cation standards have not been enforced. It is
not clear whether the independent standardiza-
tion body that will manage the school stan-
dard-setting process will also oversee the
district minimum service standards.
Minimum Service Standards for Districts
Since decentralization, quality control in Indo-
nesia has been moving towards adopting a per-
formance-based type of management and
establishing quality control systems that are
transparent, equitable, and collaborative and
are consistent with the quality improvement
agenda. This progress can be seen in the
work of a special Decentralization Facilitation
Unit (DFU) within the MoNE, which under
the guidance of the MoHA, has undertaken a
model-building exercise for setting district
minimum service standards. The Unit has
been conducting pilot studies in three prov-
inces (West Java, East Java, and NTB) and
33
Although there will be an umbrella Presidential Decree
authorizing Minimum Service Standards for several sec-
tors, the standards themselves will be set by the Minister
concerned through Ministerial Decrees, in this case the
Minister of Education.
34
Ministerial Decree 53/2001.
Education Sector Review Volume 2

five districts (Cianjur, Cirebon, Kota Sura- control quality and put district educational au-
baya, Kota Malang, and Lombok Timur). The thorities in a difficult position.
piloting began in the provincial capitals with
discussions with local government officials Lead and Lag Indicators
about the concept, function, and types of stan-
Quality management systems are most effec-
dards. The process continued at the district
tive if they are based on standards that include
level where various interest groups came to-
both “lead” and “lag” indicators.” Lag indica-
gether to discuss standards for 10 obligatory
tors describe what has been accomplished so
functions and 24 types of services. This
far. At the school level, for example, the
model-building exercise defined about 173
number of qualified teachers is a lag indicator,
minimum service standards for education (ex-
while the number of teachers sent for special-
cluding higher education), with each service
ized training is a lead indicator. At the district
type having as many as 19 or as few as two
level, the participation rate is an example of a
performance indicators (Hijmans, 2003). The
lag indicator, while the number of “at risk”
set of standards that are currently being devel-
children receiving scholarships is an example
oped include access, equity, and quality indi-
of a lead indicator. We recommend that the
cators such as enrollment rates, dropout and
standards for schools and districts contain a
completion rates by gender, students’ aca-
mixture of lag and lead indicators.
demic performance, and the percentage of the
APBD directed to the basic education sector
excluding teacher salaries. These are a mix of
Measures
input (technical) and output (performance) Setting standard measures for quality indica-
standards. The minimum service standards for tors is also an important element of a nation-
districts are critiqued in Chapter 1 on govern- wide quality management system. For quality
ance and management in this volume. management systems, the most important per-
formance measure is student learning. There
Local Targets – National Standards are many approaches to measuring student
learning, some being appropriate for quality
The national education standards were origi-
assurance and others for quality improvement.
nally intended to be set in an open process in
Each approach has specific advantages and
which the central government and the regions
disadvantages for Indonesia. For quality as-
would negotiate region-specific targets on the
surance, many countries use standardized tests
basis of indicators set by the central govern-
at the end of an educational cycle as one of the
ment. However, the MoNE now plans to have
factors that determine whether students have
national targets but flexible timelines for
learned enough to qualify for diplomas or cer-
achieving those education targets. Setting tar-
tificates of completion. In a large decentral-
gets at the national level is problematic for
ized system, equivalence among various
several reasons. First, it impinges on the pre-
private or public providers of examinations
rogative of local governments to chart their
can be assured by accrediting the testing insti-
own course. Second, it makes local education
tutions based on the rigor of their test devel-
officials accountable for their performance to
opment process, the reliability of the
two higher authorities, not only the local legis-
instruments that they prepare, and the validity
lature/executive but also the central MoNE.
of their test administration and scoring proto-
This is less troubling if all of these authorities
cols. Another alternative is to use sample-
have the same performance expectations but
based national assessments early or in the
can be problematic if the national and local
middle of an education cycle to measure stu-
performance expectations are very different.
dents’ performance against national standards.
Third, it is unclear what responsibilities the
Table 3.1 below shows how different types of
central government will have towards those
standard learning assessments can be used in a
districts that fail to meet minimum standards
quality management system.
over a period of time. If there are no incen-
tives for compliance or consequences for non-
compliance, then the standards do not help to

96
Chapter 3
Table 3.1 Common Uses of National and School-based Tests in Quality Assurance
High Stakes:
x Determine future oppor-
tunities for test takers
x Tied to performance in-
centives/ corrections
systems for schools
x Expensive to develop
and implement
x Prone to corruption
Middle Stakes
x Tied to performance in-
centives/ corrections
system for schools
x No consequences for
test takers
x Expensive to develop
and implement
x Somewhat prone to cor-
ruption
Low Stakes
x Information for plan-
ning purposes only
x Not tied to performance
incentives/ corrections
system for schools
x No consequences for
test takers
x Expensive to implement
x Not prone to corruption
Sample-based
x Information for plan-
ning purposes only
x Not tied to performance
incentives/ corrections
system for schools
x No consequences for
test takers
x Relatively inexpensive
to implement
x Not prone to corruption
High Stakes
x Expensive to develop
x Open to corruption
Low Stakes Informational ranking of students Information on individual student
x Not expensive to de-
velop or implement Not used in Indonesia
x Very demanding of
teachers
Note: EBTANAS = Evaluasi Belajar Tahap Akhir Nasional, UAN = Ujian Akhir Nasional, and UAS =
Ujian Akhir Sekolah.
Norm Referenced
Nationwide or Regional
Filtering: Rank students in per-
centiles to determine which stu-
dents may pass to favored
schools at the next level
Formerly used in Indonesia
(EBTANAS)
Comparative ranking of schools
or districts: Used to rank order
schools or districts to determine
which schools are eligible for
benefits, remediation or correc-
tion
Not used in Indonesia in educa-
tion sector, (an analogy can be
drawn with the Human Resource
Index which is used to rank dis-
tricts to determine welfare eligi-
bility)
Informational ranking of schools
or districts
Not used in Indonesia in educa-
tion sector, (an analogy can be
drawn with rankings on Human
Resource Index
International tests, such as
TIMSS, used to rank countries
for informational purposes
Used in Indonesia
School-based
Competitive ranking of pupils for
purposes of screening admissions
or awarding prizes or benefits.
Entrance exams are used in In-
donesia to screen applicants.
performance
Used in some classrooms
97
Quality Assurance and Improvement
Competency Referenced
Qualifying: Determine which
students obtain diplomas or cer-
tificates.
Currently used in Indonesia
(UAN)
Diagnostic: Used to recommend
specific quality improvement in-
puts for particular schools
Not yet used in Indonesia but can
be used in conjunction with ac-
creditation system or Provincial
Quality Improvement Institutes
(LPMP)
Informational for district or
school planning purposes only.
Assessment of overall system ef-
fectiveness for policy and pro-
gram planning
Not yet used in Indonesia
Qualifying: Determine which
students obtain diplomas or cer-
tificates.
Used in Indonesia (UAS)
Education Sector Review Volume 2

Box 3.2 Information from a National Evaluation System Changed the Focus of Debate in Brazil

Brazil is a large, decentralized country like Indonesia. Its decentralized structures and systems are heterogeneous to
the point where there are almost as many different education systems as there are states and cities. In such a system,
information is especially critical.

The evaluation system introduced in the 1990s has three components: a school census, a national assessment, and
public examinations at the end of the basic education cycle. Brazil has built up a very useful professional expertise
on the application of sample-based standardized student assessment tests that bring educational quality into the fore-
front of policy formulation and implementation. The active dissemination of test results, together with results about
resources and school operating standards, are fuelling competition among municipalities to improve their schools.
This practice puts a high value on the importance of establishing feedback mechanisms for ensuring that information
is shared across and within sub-national entities and community organizations.

Information derived from the evaluation tools focused the educational debate in Brazil on equity in the distribution of
public resources and conditions of instruction, the quality of instruction at various levels and in the various school
systems, teacher training, school autonomy, and management models. More specifically, after the census revealed
financing inequities among districts, the government redistributed about $10 billion among all public schools in dif-
ferent localities, which benefited 30 million students throughout the country. As a result of the national assessment,
policymakers introduced accelerated learning programs for students who were at least two grade levels behind their
age group and a training and certification program for teachers. Also, introducing a requirement that students had to
pass public examinations to graduate from secondary school created a standardized credential that is useful to both
higher education institutes and employers.

Source: World Bank, 2002.

Although information from standard tests can
be used to devise and implement improve-
ments within schools, most systems rely on
school-based tests or continuous classroom as-
sessment to monitor and upgrade the progress
of individual pupils. These methods require a
great deal of time and attention from teachers.
Information
We discuss the need for a robust information
system in Chapter 1 on governance and man-
agement. At its most basic, the information
system must collect information relative to the
national standards using the standard metrics.
One critical function of the information system
is to provide reports to all levels  schools,
districts, provinces, and the central govern-
ment. For quality management purposes, in-
formation on performance is most useful if it
includes three types of information  each
school or district’s performance relative to na-
tional standards, their own past performance,
and the performance of other districts or
schools. In this way a district or school can
monitor changes in its performance over time.
Although the results of performance assess-
ments can be reported as a single number by
using a formulated index, if the results are dis-
aggregated by topic, this can help districts and
schools to meet specific quality improvement
targets. Brazil has a large, decentralized edu-
cation system in which performance informa-
tion is used to inform policymakers’ decisions.
A brief description of how pupil assessment is
managed in Brazil is provided in Box 3.2.
Recommendations
We make the following recommendations in
the area of quality management.
x Under a decentralized program ap-
proach to quality management, a
permanent capacity for reviewing
standards and measures is required.
The national Education Law (No,
20/2003) requires the establishment
of an independent body reporting to
the Minister of Education that is re-
sponsible for standardization and
evaluation. Until such a body is es-
tablished, we recommend that the
MoNE appoint a standardization
steering committee to oversee the
several parallel standard-setting proc-
esses that are already underway.
x In the interest of imposing discipline
and rigor on the standard-setting
process, we recommend that staff
who are qualified, experienced, and

98
Chapter 3
empowered to make difficult deci-
sions actively participate in or steer
the standard-setting body. In Indone-
sia, policies are not set by law or
even by decree, which are often
vague and contradictory. Rather, the
policies are embodied within opera-
tional guidelines written by mid-
ranking professionals or even inde-
pendent bodies. In a sense, the diffi-
cult job of policymaking has been
delegated to a level of staff who are
not sufficiently qualified, experi-
enced, or empowered to set policies.
x We recommend an international peer
review through a seminar and follow-
up workshops before the national
education standards and minimum
service standards are finalized. Host-
ing international seminars has raised
awareness within the MoNE that
standard-setting activities are instru-
mental to assuring and improving
educational quality. The MoNE has
recently completed drafts for both
kinds of minimum service standards
but would benefit from additional in-
put before codifying those drafts into
regulation.
Quality Assurance
This section describes the status of quality as-
surance in the education sector using examples
from current practices. The link between the
quality assurance organizations is not clear,
and there is potential for them to produce con-
flicting messages and for there to be duplica-
tion in their efforts.
Legal and Regulatory Framework
The New Education Law (No. 20/2003) de-
votes an entire chapter to the issues of evalua-
tion, accreditation, and certification (Chapter
XIV, Articles 57-59).
x The law calls for the evaluation of
learners, institutions, and programs.
Although the law is vague and some-
what contradictory, it seems to stipu-
late two kinds of learner evaluation:
continuous assessment by teachers and
the periodic evaluation of learners,
schools, and programs by an inde-
99
Quality Assurance and Improvement
pendent institution. Further, it speci-
fies that the community and/or
professional organizations can form
independent bodies to undertake those
evaluations of learning outcomes.
x The article on accreditation (Chapter
XIV, Article 60) stipulates that the
government and/or independent bodies
will accredit programs and schools in
the interests of public accountability.
Furthermore, the law states that ac-
creditation will be based on “open cri-
teria” that are not further explained.
x The article on certification (Chapter
XIV, Article 61) states that certifica-
tion will be in the form of “diplomas”
(ijazah) and certificates of compe-
tency. Diplomas will be awarded to
students in acknowledgement of their
learning achievement and/or their
completion of a level of study after
passing an examination organized by
an accredited school. Schools and
training institutes will give compe-
tency certificates to learners and
community members in recognition of
x their competency to undertake specific
work after passing competency tests
organized by an accredited school or
certified institution.
In theory, these stipulations will be clarified
through government regulations (RPPs), Min-
isterial Decrees, and procedural manuals.
The Education Law mandates the preparation
of 14 Government Regulations (RPPs), and the
drafting of one additional law on the legal
status of schools (BHP). As we discussed in
the section on standards above, a draft RPP is
currently being prepared that addresses both
Chapter IX on National Education Standards
and Chapter XIV on evaluation, accreditation,
and certification summarized above.
Current Practices
Currently, there are several quality assurance
mechanisms practiced in Indonesia. These can
be organized into two groups: mechanisms
that apply to individuals (students and teach-
ers) and mechanisms that apply to institutions
(schools and local government). The mecha-
nisms are falling short of expectations due to
issues such as tension between the center and
districts regarding roles and responsibilities for
Education Sector Review
quality assurance and technical matters like the
lack of capacity to implement policies pertain-
ing to school and district educational quality
assurance.
Students and Teachers
At the present time, quality assurance pro-
grams for students and teachers are examina-
tion-based, routine, and structured as part of
the normal course of doing business. There
are clear incentives for students and teachers
to comply with standards, as there are clear
consequences for failing (for example, senior
secondary students who do not pass the final
national examination are not allowed to gradu-
ate and candidate teachers who fail knowledge
tests are not certified). The standard examina-
tions for measuring student achievement and
the competency of candidate teachers, though
far from ideal, are reasonable. Technical ex-
perts at the MoNE acknowledge that students’
final examinations are not yet adequately stan-
dardized, although much progress has been
made in this direction.
Student Diplomas. In Indonesia, academic
quality is monitored through students’ end-of-
level examinations. School certificates are
granted or withheld on the basis of the stu-
dents’ examination scores. These certificates
grant, but do not guarantee them access to the
next level of study. In the 1980s, the Evaluasi
Belajar Tahap Akhir Nasional (EBTANAS)
was introduced as a national test. Originally
intended as a tool to assess and control the
quality of the education system, the tests
quickly became high-stakes public examina-
tions that determined which students would be
able to continue their education and the kind
of school to which they could hope to gain
admission.35 Due to widespread criticism of
expense, corruption and lack of usability of the
public examination system, the EBTANAS
was abolished by ministerial decree in 2002
35
Although the EBTANAS was a nationwide public ex-
amination, it did not meet the standard for a standard-
ized test. Provinces were sent alternative questions and
could choose easier or harder questions to suit the ability
of students in their region. The formula to work out the
final score also varied by region to make sure that any
differences in final scores between regions were not too
great, although in practice the differences in scores be-
tween provinces were considerable.
100
Volume 2
and replaced at the junior and senior secondary
levels only with the Ujian Akhir Nasional
(UAN) and the Ujian Akhir Sekolah (UAS).
The UAN covers three core subjects (Bahasa
Indonesia, Mathematics, and English) and
draws the multiple-choice items from the same
item bank for schools nationwide. The items
on the UAN still mostly require only factual
recall and rarely measure competencies, espe-
cially in subjects like Indonesian in which lan-
guage competency is the core of the
curriculum. The UAS is the test for all na-
tional subjects other than Bahasa Indonesia,
Mathematics, and English as well as local con-
tent chosen by the districts and can include es-
says, portfolios, laboratory work, and other
assessment methods. However, at this stage,
the UAS also mainly relies on multiple-choice
questions. Tests can be, and often are, set by
individual schools or, in some cases, as the re-
sult of agreements among groups of teachers at
the district (junior and senior secondary) or
sub-district (primary) level.
The parliament decided to permit the 2004
public examinations to go ahead but stated its
intention to discontinue allocating public funds
for that specific purpose in the future. As a
newly elected parliament will be responsible
for appropriations in 2005, it remains to be
seen whether the 2004 public examinations
are, indeed, the final finals.
Teacher Certification. Teachers are the single
most important determinant of students’
performance and school quality, and teacher
issues are discussed in depth in the next
chapter. Therefore, the management of the
supply of this most critical “input” must be the
first step in ensuring that the teaching
workforce meets the country’s minimum
standards of quality through the process of
certification. There are currently four types of
teachers in Indonesia (see Box 3.3), two of
which are certified. Teacher certification is
managed by an appointments procedure,
which takes into account their performance on
standardized tests.
For the last six years, graduates of accredited
institutions of higher education who wish to
become junior or senior secondary teachers or
contract teachers must take a public
examination, which tests their general
Chapter 3 Quality Assurance and Improvement

Box 3.3 Quality Assurance of the Teaching Force

x Public teachers are civil servants and have minimum teaching qualification (for a new SD teacher, D2,
two year degree and post SMU, for new SMP/SMU teachers, this is S1, a four year university degree).
x Contract teachers are fixed term contract teachers, normally engaged as part of education projects but
with the same qualifications as public teachers.
x Permanent teachers are engaged by foundations to teach in private schools. Those in better schools
have to have all of the required minimum qualifications described above, but in poorer schools, many
have less qualifications.
x Temporary teachers are employed in all kinds of schools (private and public) to fill shortages and are
normally paid by the scholl committee or a foundation. These teachers vary widely in their
qualifications, some have only the minimum qualification and many in poorer schools lack even the
minimum. Their wages are often very low, sometimes less that Rp. 100,000 per month.

knowledge,36 subject mastery, and scholastic
aptitude. As of this year, 2004, primary
teachers will also take the examinations. Due
to the large numbers of candidates taking the
tests each year (in 2003, 500,000 candidates
took the examination as part of the application
process for advertised junior secondary
education positions), a test of teaching
competencies has not been included. The
results of six years of testing will provide a
rich resource for future research into the
specific strengths and weaknesses of the
current teaching workforce.
Schools and Local Government
School Accreditation. In the future, school-
level quality will be maintained and improved
through an accreditation system established
under the new Education Law. This
accreditation system will apply to all schools,
whether public, private, general, or madrasah.
Accredited schools will be ranked into three
categories, and the lowest category will
include schools that meet the absolute
minimum standards. Thus far, the ranking of
schools under the new system is not much
different from the existing system for ranking
schools. A Ministerial Decree (KepMen
087/U/2002)37 has established an independent
36
General knowledge tests include Bahasa Indonesia,
civics, public policy, English, and mathematics.
37
Article 60 of the Education Law stipulates that the ac-
creditation of schools will be the responsibility of the
government and/or an independent body. The KepMen
087/U/2002, which predated the law established an inde-
pendent accreditation body (BAS), lists nine school
components to be evaluated during accreditation includ-
ing: the curriculum and the teaching/learning process;
school administration and management;
school/institutional organization, equipment and infra-
school accreditation body (BAS), listed the
key aspects of accreditation, and stated that the
new ranking will be used to provide guidance
on quality improvement to schools. The
accreditation procedure itself involves seven
steps. The first step involves each school
doing a self-assessment of whether it meets the
national requirements. If the school feels that
it is in compliance with the standards, then it
requests an audit from the local accreditation
body.38 If the school passes the audit, then it
receives accreditation for a four-year period.
It has not yet been decided what will happen to
those schools that do not meet the minimum
accreditation requirements over an extended
period of time. It is anticipated that many
schools, particularly the numerous small
private madrasahs that provide educational
services to many poor children especially in
remote areas, will fall far short of the
minimum accreditation standards.
The accreditation system is an interesting ap-
proach to quality assurance but tough policy
issues remain unresolved. To ensure that dif-
ficult policy decisions are aligned with na-
tional priorities, policymakers rather than the
independent accreditation body need to make
some difficult decisions about which incen-
tives and sanctions to put in place for those
schools that do and do not meet the minimum
accreditation standards. As the policy reads
now, the purposes of accreditation are twofold:
(i) to ensure that even disadvantaged children
attend schools that meet the minimum condi-
structure; staffing; budgeting; teachers and students;
community participation; and the school environment
and culture.
38
Primary and junior secondary schools will apply to the
district body for accreditation, while senior secondary
schools will apply to the province.

101
Education Sector Review
tions of learning and (ii) to provide continuing
guidance to schools to help them to improve
their quality. Assigning two technically de-
manding functions to bodies that have not yet
been established needs further consideration.
The guidance concept is appealing, but unless
it is accompanied by a serious commitment of
financial and technical resources, this guidance
will have little effect. The responsibility for
schools has clearly been assigned to the dis-
tricts, but no legislation or regulation defines
how districts can be persuaded to spend scarce
resources on programs to ensure that schools
meet national minimum accreditation stan-
dards. Furthermore, there is no explanation of
where the local accreditation bodies will find
the human and financial resources required to
conduct audits of every school and madrasah
every four years and to provide them with con-
tinuing guidance.
Districts
At present there is confusion about what
mechanisms apply for ensuring the quality of
education services managed by districts. As
mentioned above, minimum service standards
for education are being prepared, along with
standards for other decentralized sectors.
Eventually, these service standards will be-
come part of the government’s performance-
based budget procedures described in Law
17/2003. This law requires district and na-
tional budgets to be prepared based on activi-
ties that are justified against performance
standards. It is not yet clear how central fi-
nancing for districts will be tied to their ac-
tions or their performance against standards.
Nor is it clear if districts will need to justify
funding items in terms of their actions or past
performance. The education sector is increas-
ingly using the DAK mechanism for financing
national education priorities such as the Edu-
cation for All initiatives. DAK financing is
proposal-based, and the central government
could require districts to use service standards
as a basis for those proposals. By using per-
formance standards to justify both block and
earmarked grants, the national government can
use financing as a quality assurance tool.
Once national policies on district level ac-
countability for educational quality are clari-
fied, mechanisms for quality assurance at the
district level can be refined and coordinated.
102
Volume 2
Institutional Framework
There are several bodies that will be responsi-
ble for implementing the new quality assur-
ance mechanisms.
National Agencies
The task of coordinating the quality assurance
system is, under the Education Law, assigned
to a quality assurance and standardization
body, to be known as the National Standardi-
zation Body. As mentioned previously, the
government regulations associated with that
article of the law are currently being prepared,
and the particular institutional framework for
managing quality assurance has not yet been
formalized.
There is no provision for a national center to
set nationwide public examinations as a means
for quality assurance under the Education
Law. This has opened debate about the future
existence of the National Evaluation and Test-
ing Center, which until now has been respon-
sible for setting, overseeing, and managing the
marking of the current high-stakes public ex-
aminations at the end of the basic and secon-
dary cycles.
Prior to the passage of the Education Law, the
Ministry of Education established an Educa-
tional Quality Assurance Institution (Provin-
cial Lembaga Penjamin Mutu Pendidikan or
LPMP) by Ministerial Decree (KepMen
87/O/03). This decree transformed 30 provin-
cial teacher training centers into 30 branches
of the LPMP. The core functions of these
branches are to support school and teacher
quality assurance including:
x Measuring and evaluating the imple-
mentation of basic and secondary edu-
cation.
x Building models, including teach-
ing/learning models, that will help
schools to meet national quality stan-
dards.
x Assisting teachers in measuring and
evaluating the outcomes of learning.
x Helping teachers to manage educa-
tional resources for quality improve-
ment.
Chapter 3
The LPMP is not mentioned in the Education
Law, and the law assigns most of the 40 tasks
included in the LPMP’s terms of reference to
the National Standardization Body and to the
district governments. It is not clear whether
the LPMP will be continued after the accredi-
tation bodies and district quality evaluation
bodies have been formally established.
Continuing the LPMP and its branches might
be beneficial if the institution does not actually
set standards but limits its activities to provid-
ing performance evaluation services under the
direction of the school accreditation body
(BAS). The overlap of its functions with those
of the districts might be more problematic.
The following list highlights a few of the over-
lapping tasks:
x Assessing the competency of and cer-
tifying educational institutions and
staff in the provinces.
x Undertaking EMIS services including
data collection and school quality
mapping, and maintaining the data-
base for and disseminating informa-
tion on primary and secondary
information to schools.
x Supervising and evaluating primary
and secondary education in the prov-
inces.
x Certifying educational quality in the
provinces.
School Inspectors
At present, districts still use a system of circuit
inspections for quality assurance. Primary
school inspectors operate out of sub-district
offices, while junior secondary school inspec-
tors operate out of district government offices.
Although school inspectors are supposed to
provide feedback and guidance to schools on
teaching practice, most school principals and
teachers who participated in our focus groups
described the inspections as focusing almost
entirely on administrative matters. Inspectors
visit schools only infrequently, particularly
those schools located far from the sub-district
offices. In the past, many school inspectors
were retired teachers, but recently younger
people have been recruited who have been
trained in modern teaching practices and who
are physically more able to get to remote
schools.
103
Quality Assurance and Improvement
School Committees
The national policy on school-based manage-
ment includes the function of quality assur-
ance at the school level. The Education Law
specifies this function assignment and, in Arti-
cle 51, stipulates that school management must
be based on minimum service standards and
on the principle of school-based management
(Law No. 20/2003, Chapter XIV, Article 51,
paragraph 1).
The school-level body responsible for evalua-
tion and quality assurance is the school com-
mittee; these committees are discussed in
Chapter 1 on governance and management.
Teachers are assigned the responsibility for
quality assurance through classroom practices
such as continuous assessment.
Recommendations
School-level quality control under decentrali-
zation is shifting from a system dependent on
external inspections against absolute standards
to a system reliant on self-assessment against
national, local, and school-based standards
backed up by occasional external audits. In-
deed, there are far too many schools to be
monitored entirely through a system of exter-
nal inspections. Ideally, the results of both the
schools’ self-assessments and occasional ex-
ternal audits will serve as inputs to the process
of improving school quality, thereby linking
the quality control and quality improvement
efforts. Towards this end we make the follow-
ing recommendations:
x We recommend that the MoNE de-
velop a model for enabling citizens to
participate in preparing and refining
regulations. The model-building exer-
cise could be implemented by : (i) or-
ganizing information campaigns about
government regulation aimed at all
education sector stakeholders, (ii)
conducting public hearings, and (iii)
updating and finalizing the govern-
ment regulations.
x Indonesia lacks a standardized test of
learning to provide geographically
comparative information on students’
academic performance. While there
are one or two internationally compa-
rable tests, there are no domestic ones
Education Sector Review
that give an accurate picture of the
state of learning within Indonesia. We
recommend introducing a periodic na-
tional assessment of learning, particu-
larly at the lower grades, which would
yield useful information about the
overall performance of the education
system.
x Although some progress has been
made in establishing a system for
school accreditation, many difficult is-
sues are left unresolved. For example,
at present there is no incentive system
with rewards and corrections for en-
couraging schools and districts to
comply with national standards. Nor
does the policy include a process for
resolving disagreements over accredi-
tation or monitoring results. Also
lacking is a system for gathering data
on quality indicators to be used for
quality control and resource allocation
purposes. Until the specifics of the
compliance and implementation proc-
esses are sorted out, the new accredita-
tion system is not likely to serve its
purposes. We recommend an interna-
tional peer review of the proposed ac-
creditation system through an
international conference and a series
of follow-up workshops with policy
makers to resolve difficult issues.
x Assuring quality in districts and
schools through minimum service
standards is still in the planning phase.
We recommend that quality assurance
be linked to annual performance-based
budgets prepared by schools and dis-
tricts. In this way, the quality assur-
ance system will become a routine part
of financial planning and performance
reviews.
x Indonesia is currently planning some
comprehensive anti-corruption
activities that will include monitoring
independent from the government. We
recommend that anti-corruption
activities be considered part of the
quality assurance process. The Social
Assessment for the Basic Education
IV Project reports that many teachers
104
Volume 2
claim that the certification process is
not transparent and that the extortion
of sums of money by officials in
exchange for favorable appointments
is a common practice. Indeed, the
practice is so widespread that poor
parents of junior high students feel
that the teaching profession is closed
to their offspring as they cannot afford
the illegal payments (World Bank,
2001). However, once these anti-
corruption activities are implemented,
the quality of the teaching force will
no longer be undermined by corrupt
practices like these.
Quality Improvement
This section places quality improvement in the
context of Indonesia’s experiments with qual-
ity improvement, the current legal and regula-
tory framework governing quality
improvement. We then tie failures to improve
quality to underlying structural issues such as
inadequate sector finance and absence of a
system for sustaining quality improvement that
is integrated into routine sector management
practices.
The Indonesian Experience in School
Quality Improvement
Indonesia has been experimenting with quality
improvement for over 30 years. During this
time, public support for quality improvement
has been project-based and channeled from the
central government while private support has
been school-based and channeled through
school fees and other household contributions.
Remarks made by school committee represen-
tatives and school principals during the district
consultation process during the preparation of
this report revealed that the dynamic that pro-
pels schools to improve quality is market-
based; better public and private schools can
charge higher fees for services. Two factors
limit the effectiveness of the market dynamic:
the limited supply of quality improvement
goods and services and the modest purchasing
power of even the most successful schools.
Indonesia has been expanding the supply of
government-provided goods and services
through centrally funded projects for over 30
years. Since the 1990s, Indonesia has been
experimenting with giving government grants
to schools for quality improvement. Donors
Chapter 3
have been active in the sector guiding and in-
vesting in many publicly financed projects that
fund school rehabilitation, textbooks, libraries,
teacher training, technical advice, and other
inputs.39 With all this experience, donor guid-
ance, and investment, why has the quality of
education overall not improved?
Project Approach
The problem is structural in that quality im-
provements are project-based and not part of a
school’s or a district’s routine operations. Pro-
ject-based interventions such as cluster-based
in-service training, library construction, or
proposal-based grants for quality improvement
are sometimes successful during the life span
of the project, but nearly all prove to be unsus-
tainable in the long run due to high unit or
high recurrent costs. In addition to a short life
span, quality improvements are seldom evalu-
ated in terms of their impact on school per-
formance and they rarely spread spontaneously
to those schools that were not project benefici-
aries. One approach that has not yet been ap-
plied in Indonesia is to incorporate quality
improvement into the routine operations of
schools or districts by: (i) including quality
improvement activities in a consolidated
budget for school financing that is transferred
from districts to schools either as part of the
school’s block grant or as earmarked funds
depending on the school’s capacity for plan-
ning and accounting, and (ii) using a perform-
ance-based budgeting system that holds
districts accountable for schools’ minimum
service standards.
39
A summary of 25 donor-supported projects appears in
Appendix 1.
105
Quality Assurance and Improvement
Research Underlying Quality
Improvement Projects
The quality improvement projects over the last
decade have been based on practices derived
from two main research areas – school effec-
tiveness and school reform.
Researchers have built up a foundation of lon-
gitudinal, quantitative, and empirical studies in
developed and developing countries about
what mix of inputs into “the school climate,”
“enabling conditions,” and “the teaching/
learning process” influence students’ cognitive
achievements. Unfortunately, the results of
these studies have not yielded a sequenced list
of investments guaranteed to improve per-
formance. School reform research is grounded
in management theory, particularly manage-
ment for change, and is primarily based on
qualitative research and case studies. School
reform emphasizes improving the within-
school decisionmaking process, enhancing
school/community relations, encouraging the
generation of ideas from within schools about
how to improve quality, and in-house capacity
building. Unfortunately, research into the im-
pact of school reform on school performance
is not conclusive. Indonesia has experimented
with projects derived from each of these re-
search areas. Table 3.2 compares the attributes
of the school effectiveness approach and
school reform approach.
Education Sector Review Volume 2

Table 3.2 Comparing the School Effectiveness and School Reform Approaches
School Effectiveness
Research area Cognitive science (theory into
practice)
Research thrust Teaching and learning process
Classroom teaching practices
Allocation of production func-
tions
Research variables Inputs
School Reform
Management science (practice
into theory)
Managing for quality improve-
ment
Managing for change
School control over resources

Classroom processes School governance structures

Learning achievement School management processes

Research methods Longitudinal, quantitative, and Qualitative studies to explain the
empirical studies highly context-specific nature of
quality improvement
Rigorously designed sequential
studies Evaluations of individual im-
provement initiatives
Methodologically complex analy-
sis using statistical techniques
such as multi-level modeling to
large data sets
Examples of projects/programs in SPP-CBSA COPLANER
Indonesia SSEM Cosep
(Some have elements of both: the PEQIP BOMM
projects are categorized by their SEQIP REDIP I and II
major thrust and intention) PJSE DSSD
B&R DBEP
BEP (MoRA) CLCC
BEP (MoNE) MBE
PGSD
PGSM
CLCC
Major inputs Pre and in-service teacher training School and kecamatan manage-
ment capacity building
Educational materials School Improvement Grants

School rehabilitation
Weaknesses Limited demand for quality im- Limited supply of quality im-
provement services in non-project provement services
schools

Does not explain how to make in- Does not explain how to improve
effective schools effective quality of teaching and learning

Defines effectiveness in terms of

Key findings from research
cognitive and academic outcomes
rather than social and effective
ones
Influence of student background Management of change
on performance
Improvement as a process at sys-
Importance of “proximal” factors tem, school, and classroom levels
over “distal” ones
Descriptive analysis of in-school
Differential effectiveness within cultures and power relationships
schools

106
Chapter 3 Quality Assurance and Improvement

School Effectiveness School Reform

Interaction of factors within

schools
Interventions Technical and professional Decentralized decisionmaking
Centrally defined, standard pack-
age of inputs
Support for changing practices
External pressure to change prac- that can be sustained by the
tices to meet technical or profes- school over the long term
sional standards
Note: A brief description of each project featured in this table appears in Appendix 3.1.

Current Legal and Regulatory
Framework for Quality Improvement
Unlike quality assurance, there is no chapter in
the Education Law that specifically addresses
the issue of quality improvement. However,
quality improvement is mentioned several
times, both as a general agenda item and as the
specific goal of several statutes. For example,
in Article 56 on education boards and school
committees, the law stipulates that the role of
the community in improving quality in schools
should include planning, monitoring, and
evaluation. Prior to decentralization, the rou-
tine management of the primary school system
was assigned to local governments, and re-
sponsibility for educational quality improve-
ment was assigned to the central government.
Under decentralization law 22/1999, these
functions were reunited and districts were
given responsibility for the education sector
overall. A national policy of school-based
management through school committees and
district education management by education
boards was formalized by a Ministerial Decree
(KepMen 44/U/02). Under this policy um-
brella, schools are responsible for improving
the quality of education while districts are re-
sponsible for improving the quality of the
management of educational services.40
Whether this transfer of authority translates
into a transfer of assets or of liabilities de-
pends upon two things: (i) the condition of the
schools and the capacities of the district and
(ii) the amount of the public budget allocated
to education.
The legal obligations of the central govern-
ment in school financing are limited to paying
teachers’ salaries through the wage transfer
portion of the DAU formula. Although the
constitution and the Education Law (No.
20/2003) stipulate that 20 percent of the na-
tional budget and 20 percent of the block
grants to districts must be spent on education,
there is no regulation that establishes a funding
floor for schools. Indeed, there is no national
law that regulates within-district transfers of
APBD funding to schools. If the government’s
appropriation to the education sector does not
increase to the level stipulated under the con-
stitution and the decentralization laws, quality
will not improve equitably. Channeling qual-
ity improvements through the DAK mecha-
nism could ensure that funds allocated for
education are spent for schools and by schools.
This chapter on quality recognizes but does
not address the issues of the 7 to 15-year-old
children who do not attend school. Under the
law, they are entitled to receive their fair share
of public spending on education, but in prac-
tice this already disadvantaged group receives
far less than the young citizens who are en-
rolled in school.
Project preparation documents for the World
Bank’s Basic Education IV project under-
scored the need for quality improvement in
early childhood and early grade education.
Background papers reported that teachers
spend most of their classroom time in grades 4
and above on remedial teaching rather than on
helping students to master grade-level skills.
This pattern will continue unless the govern-
ment adopts programs that prepare children for
schooling and strengthen the early childhood
component of basic education.

107
Education Sector Review
Financing the Quality Improvement of
Schools
What kind of value is the Indonesian state and
are Indonesian families getting for what they
spend on basic education? The Education for
All (EFA) task force has estimated that com-
pulsory academic fees for primary and junior
secondary average about Rps 213,000 per pu-
pil. These fees are used to cover schools’ op-
erating expenses and improvements in the
quality of its physical assets, teachers’ salaries,
schoolbooks, learning materials, and equip-
ment. This implies that public spending on
these basic conditions of learning is inade-
quate. At the district level where education
personnel constitute over half of all public
employees, up to 60 percent of the routine and
development district budget (APBD) is spent
on education, primarily on routine expenses
such as teachers’ salaries. Educational facili-
ties constitute more than half of the assets held
by many local governments. The central gov-
ernment has no formula for equalizing district
expenditures on quality improvements and no
means to ensure that districts allocate their
education resources equitably. The current
practice of channeling quality improvement
inputs to schools directly through centrally
funded projects exceeds the two-year time
limit for direct transfer of resources that was
set in Law 25/1999.
In Chapter 2 on financing, we pointed out that
Indonesia is spending less on education than
might be expected given its per capita income
level. The introductory chapter showed that
Indonesian children perform worse on stan-
dardized international tests than children in
neighboring countries but better than children
in some countries that spend about the same
proportion of public money on education.
Taken together, the data show that Indonesian
parents and the state have been getting reason-
able value for their expenditure compared with
other countries; in other words, they spend lit-
tle and get little. Furthermore, Chapter 2 on
financing revealed that spending on education
in Indonesia is inequitable, resulting in un-
equal access and quality. Box 3.4 describes
New Zealand’s approach to equalizing quality
in a decentralized system.
108
Volume 2
Box 3.4 The New Zealand Equalization Pro-
gram
There is a tendency in decentralized education
systems for differences in quality to increase be-
tween wealthier and less wealthy areas unless ex-
plicit corrective measures are taken. In New
Zealand, the original design of the school-based
management reforms did not include mechanisms
to ensure the equitable financing of schools. In
response to this absence, the government created
the Targeted Funding for Educational Achieve-
ment (TFEA) as a component of schools’ operat-
ing grants. The TFEA is targeted to specific
schools to enable them to overcome the barriers
to students’ learning that are associated with so-
cioeconomic disadvantage. All schools are
ranked by decile, and per-student funding in-
creases as the school’s decile declines.
Organizational Systems for Sustaining
Quality Improvement
In this section, we discuss the organizational
frameworks for sustaining quality improve-
ment, namely school-based management and
district development planning. School-based
management is not only a policy of the MoNE,
but is also mandated under Law 20, article
51(1). District development planning is re-
quired under Law No. 17/2003 on perform-
ance-based budgeting. Although neither of
these systems deals directly with the quality
issue, both systems have some potential for
sustaining quality improvement. District de-
velopment planning is discussed in Chapter 1
on governance and management. In the sec-
tion below, we focus on school-based man-
agement.
School-based Management
In Indonesia, the strategy that has been
adopted to improve schools over the long term
is school-based management (SBM). The in-
tention behind school-based management is to
engage the wider local community through
school committees in planning, monitoring,
and improving school quality (Article 56 Law
20/2003). Very preliminary findings from our
consultations with district-level officials indi-
cate that school committees have been set up
Chapter 3
but are not yet active in the area of quality im-
provement.41
School-based management does not guarantee
quality improvement. International research
reveals that the link between SBM and quality
improvement is inconclusive. According to a
recent review of 83 studies of SBM programs
around the world, there is no universally posi-
tive relationship between school-based man-
agement and school performance or school
quality improvement (Leithwood and Menzies,
1998). In fact, the authors conclude that SBM
fails to improve students’ academic achieve-
ment or to reduce dropout and repetition rates,
even though SBM does increase parents’ and
communities’ say in decisionmaking, teachers’
participation in developing school improve-
ment plans, and administrative efficiency in al-
locating scarce resources effectively. Other
research indicates that it is not school-based
decisionmaking per se that improves learning;
rather, it is the type of decisions that schools
are entitled to make for themselves. Schools’
autonomy in making personnel decisions,
teachers’ autonomy in choosing which teach-
ing methods to use, and teachers’ involvement
in procurement decisions are particularly in-
fluential (Woessmann, 2001).
Despite several well-known shortcomings,
SBM is the best method available in Indonesia
for making quality improvement a part of rou-
tine school operations. Thirty years of pro-
jects have yielded insights into what
methodologies work best in classrooms to in-
crease student achievement and to make
schooling a pleasant experience for both
teachers and students (for example, active and
contextual learning). Unfortunately, systemic
and structural barriers, such as a lack of ac-
countability, insufficient human and technical
resources, and widespread corruption, prevent
good practices from spreading spontaneously.
41
Focus group discussions with teachers and principals
in Lampung and Makasar as well as meetings with
school committee members in Central Java and Yogya-
karta revealed that many principals have not yet dis-
cussed performance standards or improvement planning
with school committees. Some focus group members
also commented that the performance monitoring pres-
ently being conducted by school committees, an essential
element in sustaining quality improvement, concentrates
only on financial matters.
109
Quality Assurance and Improvement
Background papers on school-based manage-
ment written for this report acknowledge that
participatory management and adequate school
resources are a necessary but not sufficient
condition for improving student achievement.
They also recognize that schools require,
among other elements, performance informa-
tion (through both school profile statistics and
self-assessments) and accountability systems
(Umaedi, 1999). Although the MoNE has dis-
seminated guidelines to schools for carrying
out performance self-assessments that incorpo-
rate these concepts, none of the schools in-
cluded in the focus groups mentioned using
them.
In response to studies indicating that school ef-
fectiveness inputs are not always used and
maintained,42 Indonesia has been experiment-
ing with pilot programs that require schools to
prepare improvement plans designed to im-
prove teaching and learning. Since 2000, many
quality improvement programs have been pro-
viding small grants to schools to implement
their school development plans. These plans
reveal much about the gap between the priori-
ties of education professionals and the priori-
ties of school managers. Box 3.5 contains a
description of the typical content of most
school development plans.
However, there are many steps that can be
taken that move beyond the limited scope of
most school improvement plans. One such step
involves package-based improvement grants.
In Indonesia, under the SIGP program of
2001-2002, the central government gave a
grant package to all schools that met all of the
necessary requirements and conditions. SIGP
funds could only be used for seven purposes:
buying books and stationery, hiring teachers,
purchasing teaching aids, renovating build-
ings, repairing classrooms and library furni-
ture, installing water and sanitation facilities,
and introducing school-based teacher training.
Each school received a set amount depending
42
For example, staff from the MBE project in East Java
and Central Java reported that several of the libraries in
the 36 schools that they visited appeared to be unused
judging by the dust on the books and the records. Also,
staff from the JBIC team on field visits to recently con-
structed junior secondary schools in 2002 reported that
over half of the new school stock was not being regularly
maintained.
Education Sector Review
on its level of poverty, the condition of its
physical plant, and safety considerations. Dis-
trict committees selected the schools and de-
termined the amount of the grant. REDIP also
used a menu of restricted choices for school
grants and required schools to produce simple
proposals written to a template. Packaged
grants require less planning capacity on the
part of schools than SBM but remove respon-
sibility from the school and community for
self-assessment and program development.
Box 3.5 School Development Plans and
Quality Inputs
There has been no research published yet on the
comparative results of school reform projects.
Anecdotal evidence provided by field workers
from the Managing Basic Education (MBE) Pro-
ject indicates that the school development plans
from participating schools are confined largely to
physical conditions such as rehabilitating build-
ings and providing more books. A recent visit by
MBE project teams to REDIP sites in Central
Java found little change in teaching as a result of
the program. Likewise, a review of DBEP school
improvement proposals confirmed that schools
tend to request the rehabilitation of their facilities
and the provision of more library books and other
material inputs rather than teacher training. The
focus on physical inputs is partly the result of the
lack of teacher trainers. The demand is there, but
there is no supply to meet it. The CLCC project
is slightly different in that it focuses on SBM in
order to improve teaching and directly tackles the
training issue by increasing the supply of trainers.
Recommendations
If simply providing inputs improved quality
and school performance, then district educa-
tional planning would simply be a question of
channeling inputs to schools. Unfortunately,
the link between specific inputs such as teach-
ers’ salaries or textbooks and particular out-
puts such as better student test scores is not
straightforward, and process functions can ei-
ther enhance or inhibit progress towards that
goal. The use of textbooks, for example, is
nearly as important as their availability; nor is
the availability of particular teaching materials
as significant in raising learning achievement
as teachers having a say in which materials are
procured (Woessmann, 2001 and Pritchett and
Filmer, 1999).
110
Volume 2
x The absence of knowledge and infor-
mation about education quality im-
provement at the district level is a
major inhibiting factor. Projects such
as the DBEP that used proposal-based
grants in an attempt to enhance dis-
tricts’ ability to improve school qual-
ity have shown that districts lack the
experience and knowledge to develop
multi-year programs to improve edu-
cation quality. We recommend mak-
ing a significant investment in
building the technical and managerial
capacity of districts to improve qual-
ity.
x The supply of competent government
and private sector trainers and con-
sultants is a compounding and binding
constraint. Therefore, we recommend
making a significant investment in de-
veloping the capacity of public and
private providers of quality improve-
ment services. Indeed, knowledge
about how to improve school quality
already exists in Indonesia; the bottle-
neck is that there are not enough high
quality “service providers” (such as
competent and informed teacher train-
ers) to apply this knowledge in every
school. Centrally planned quality im-
provement projects are often well-
conceived packages that, in their pilot
phases, are usually successful in
achieving their objectives. In the pilot
test phase of such projects, project
teams generally provide services to
schools directly, but it is impractical to
extend this pilot approach to all of the
one and a half million teachers in In-
donesia’s 180,000 schools. To over-
come this challenge, we recommend
using some variation of a cascade
model, in which the people who best
understand the intervention (project
designers) train others who then train
teachers, which means that there can
be as many as three or four layers of
training in between the project team
and individual teachers. If anyone in
the chain does not fully understand the
intervention or training methods, this
can result in poor performance further
down the chain. As a result, there are
few examples of improvements lasting
Chapter 3
beyond the life of the project or of
good practices spreading spontane-
ously to other schools.43
x Schools are asymmetrical in their abil-
ity to implement quality improvement.
Also, school performance can deterio-
rate as well as improve under decen-
tralization. Therefore, we recommend
taking into account the performance of
schools relative to national standards
and to their own past performance
when formulating school or district
budgets and education development
plans. One such approach, an adapta-
tion of the “balanced scorecard” is
presented in Appendix 3. 2.
Conclusion and Summary of
Recommendations
We conclude that the reason why the quality
of education overall has not improved in re-
cent years lies deep within the sector’s struc-
tural and financing systems and that quality
must be addressed by changing the sector’s
organizational structure, financing, and opera-
tional systems.
Some of the required changes in the area of
sector finance are not under the sole control of
the MoNE. To improve quality, Indonesia
must first spend more and spend wisely.
43
Several projects have experimented with this system in
reverse, with school-based interventions shared among
clusters of several local schools, which are also shared
with local government school supervisors and so forth up
the chain of command via workshops. Occasionally, as
with the CBSA, this leads to an adjustment in national
policy and the innovation becoming an established part
of the education sector.
111
Quality Assurance and Improvement
Whether the expense is borne by parents or by
the public is a matter for policymakers. Sec-
ond, schools must receive funds based, at least
in part, on a transparent, per-student formula
that factors in enrollment or attendance rates
as recommended in Chapter 2 on financing
and in the EFA Summary Report.
Third, schools must receive their share of sec-
tor development money in cash rather than in
kind, either through an earmarking or pro-
posal-based budgeting process. In terms of
sustainable improvements, schools must have
some discretion to choose the quality im-
provement interventions that they are willing
and able to implement. This will require that
they have a supply of proven quality im-
provement packages from which to choose,
cadres of competent providers of quality im-
provement services, and a flexible system for
determining the relative ability of each school
to implement independent planning and block
grant financing.
Finally, we recommend that the effort to en-
sure education quality be seen holistically as
an enterprise consisting of both assurance and
improvement functions linked by a common
set of simple standards and measures.
Education Sector Review
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Chapter 3
Appendix 3.1. Quality Improvement Projects In Indonesia Since 1990
In Indonesia during the 1990s, the government
and donors spent hundreds of millions of dol-
lars on over 25 projects to improve the quality
of primary and junior secondary education.
Various lessons can be learned from these pro-
jects, and these are summarized below.
SPP-CBSA/ALPS
Active Learning through Professional Support
to Teachers (1979-1994). UK Government
through Balitbang.
Areas: One district each in West Java, NTB,
North Sumatra, South Sulawesi, East Java,
Lampung, South Kalimantan, Central Java,
South Sumatra, and Jakarta.
The purpose of the SPP-CBSA was to enhance
the quality of teaching and learning in primary
schools by promoting active learning and a
professional development system based on
teachers’ working groups. The design used a
bottom-up approach that viewed teachers as
the main stakeholders of change. The design
recognized that teachers do not work in isola-
tion from: (i) how they were trained, (ii) the
curriculum that they teach, (iii) the financial
and administrative conditions under which
they work, and (iv) the support that they re-
ceive from principals, supervisors, parents,
and the local educational administration.
SSEM
Second Secondary Education and Manage-
ment Project (1990-1997) World Bank through
the MoNE’s Division of Junior Secondary
Education.
Areas: National but most activities focused in
West Java, Yogyakarta, Central Kalimantan,
South Sulawesi, and NTB.
The objectives of the SSEM were to improve
the quality of secondary education and to
strengthen management capacity in secondary
schools.
115
Quality Assurance and Improvement
The project provided teacher training in sci-
ence, mathematics, Indonesian, English and
social studies, helped districts to initiate clus-
ter-based training for teachers, provided fund-
ing for science equipment, and helped to
develop a national test item bank and provin-
cial-level teams to improve the testing of stu-
dents.
Management capacity was strengthened by
conducting studies to establish EMIS to help
the MoNE with school data collection and
management training workshops.
Follow-up projects include the JSE and the
BEPs.
COPLANER
Community Participation in Planning and
Management of Educational Resources (1991-
1995). UNDP/UNESCO. Through the MoNE
and BAPPENAS.
Areas: East Java, South Sumatra, North Su-
lawesi, and NTT (24 kecamatan total)
The objective of COPLANER was to improve
the quality and increase the relevance of edu-
cation by piloting a model of community sup-
port for and participation in bottom-up
education planning and school resources man-
agement within a supportive structure at the
sub-district (kecamatan) level. COPLANER
was built upon a prior UNDP/UNESCO/GoI
project that had the same objectives but was
implemented only at the province and district
levels. COPLANNER was an exploratory pro-
ject to discover how to do bottom-up planning
at the school, community, and sub-district lev-
els.
Follow-up projects have included the REDIP
and the CLCC, which have both used kecama-
tan-level community participation in planning.
PEQIP
Primary Education Quality Improvement Pro-
ject (1992-1999). World Bank through the
MoNE’s Division of Primary Education.
Education Sector Review
Areas: Aceh, West Sumatra, Yogyakarta, and
Bali NTT
The project’s objectives were to improve the
quality of primary education through improved
teaching and learning activities, to increase
districts’ capacity to manage a quality im-
provement program, and to provide special as-
sistance to poor, remote, and under-served
schools through block grants. The PEQIP had
too many sub-components and relied too much
on the cascade model for teacher training. The
legacy of the PEQIP is the school cluster ap-
proach.
No follow-up projects.
PGSD
Primary School Teacher Development Pro-
gram (1992-1999). World Bank through the
MoNE’s Division of Higher Education.
Areas: Nationwide through teacher training
colleges
The project’s objective was to enhance the
teaching/learning process in primary schools
through a new higher education teacher di-
ploma course (D2) for both pre-service and in-
service training.
The new pre-service primary teacher education
curriculum for D2 is used by all teacher train-
ing colleges.
JSEP
Junior Secondary Education Project (1993-
1998). Asian Development Bank through the
MoNE’s Division of Junior Secondary Educa-
tion.
Area: Nationwide but emphasizing un-served
and under-served areas and disadvantaged ur-
ban areas in Sumatra and Java.
The project’s goals were to support the gov-
ernment in the delivery of compulsory educa-
tion by improving academic supervision and
student assessment processes, implementing
Curriculum 1994, and strengthening the insti-
tutional capacity of the MoNE and the MoRA.
116
Volume 2
Activities included giving fellowships in cur-
riculum development and teacher training as
well as providing some facilities and equip-
ment for the MoNE’s national-level curricu-
lum center.
The follow-up consists of the SJSE in the five
provinces considered to be most in need.
SEQIP
Science Education Quality Improvement Pro-
ject (1994-ongoing). Germany through the
MoNE’s Division of Primary Education.
Areas: Jakarta, Central Java, East Java, South
Kalimantan, NTB, South Sulawesi, and West
Papua
The SEQIP’s purpose is to improve the quality
of science teaching in primary school grades 3
and 6. This is being accomplished through a
package of inputs that addresses all factors af-
fecting classroom activities simultaneously.
The logic is that sustainability at the classroom
level is ensured by a package approach. The
package includes: in-service training for se-
lected teachers in active learning methods, in
lesson planning, and in using a SEQIP science
kit; training for principals and school supervi-
sors so they can support the teachers, science
kits for teachers and students, and a system for
kit maintenance; teachers’ guides on how to
use the kits in lessons and guidelines on using
new pupil textbooks; improved end of term
test items to match the new emphasis in sci-
ence teaching; and a project monitoring sys-
tem.
MDLCC
Managing the Delivery of Local Content Cur-
riculum (1995-1997). UNDP through the
MoNE’s Division of Junior Secondary Educa-
tion.
Areas: Lampung
The purpose of the project was to develop
policies and strategies to enable junior secon-
dary schools to attract and retain pupils and to
develop links between post-primary education
and income-generating opportunities.
Project activities included designing and refin-
ing management for local content delivery and
Chapter 3
producing case studies on difficulties encoun-
tered in delivering local content to primary
levels.
PJSE
Private Junior Secondary Education Project
(1995-2001). Asian Development Bank
through private junior secondary schools.
Areas: Lampung, Jakarta, South Kalimantan,
and South Sulawesi.
B&R
Book and Reading Development Project
(1996-2001). World Bank through Sarana.
Area: National
The objectives of the project were to improve
the quality of education by improving the pro-
duction and distribution of textbooks and by
helping teachers to use textbooks in a more ef-
fective way.
The project’s activities included supplying
textbooks to all junior secondary schools in all
EBTANAS subjects and teachers’ guides in
non-examined subjects; establishing the Na-
tional Textbook Evaluation Commission in the
Book Center to evaluate the quality of private
junior secondary books; holding workshops on
writing textbooks for publishers: producing
guidebooks for teachers; and developing a
media campaign to promote reading.
PGSM
Secondary School Teacher Development Pro-
ject (1996-2001). World Bank through the
MoNE’s Division of Higher Education.
Area: National
The project’s objectives were to strengthen
pre- and in-service teacher education and the
links between teacher training colleges and
secondary schools.
The project’s activities included improving the
curriculum, procuring science equipment, de-
veloping textbooks, establishing student sup-
port centers, and providing scholarships to
needy teachers to upgrade to S1.
117
Quality Assurance and Improvement
CJ-JSE
Central Java Junior Secondary Education
Project (1996-2002). World Bank through the
MoNE’s Division of Junior Secondary Educa-
tion.
Area: Three districts in Central Java and all
districts in Yogyakarta
All of the World-Bank-financed JSE projects
had the same objectives: to expand access to
junior secondary education in a cost-effective
and equitable way; to improve the quality of
junior secondary education; and to strengthen
management capacity at the school level. For
each JSE project, priorities and needs were de-
fined at the provincial level along with the in-
stitutional capacity to implement chosen
interventions. All stakeholders at the prov-
ince, district, parent association, school, and
foundation levels (for private schools) were
involved in developing project proposals
within each province.
Access was expanded through a school con-
struction and furnishing component, the hiring
of contract teachers for remote areas, expand-
ing the open junior secondary program by
supplying books and reference materials and
by covering its operating costs, and the provi-
sion of scholarships to needy students. Qual-
ity was improved through in-service training at
the district level, cluster-level teacher support
groups, and the supply of teaching materials
and libraries to rural schools. Training was
provided to province- and district-level staff
on managing information systems to enable
them to analyze trends and identify problems.
At the school level, training was provided in
school-based management and professional
support to teachers.
The economic crisis and mid-term review
caused resources to be redirected to scholar-
ships and school grants.
S-JSE
Sumatra Junior Secondary Education Project
(1996-2002). World Bank through the
MoNE’s Division of Junior Secondary Educa-
tion.
Area: Aceh, West Sumatra, Jambi, Lampung,
and South Sumatra
Education Sector Review
EI JSE
Eastern Islands Junior Secondary Education
Project (1996-2002). World Bank through the
MoNE’s Division of Junior Secondary Educa-
tion.
Area: East Java and NTT
COSEP
Community Participation for Strategic Educa-
tion Planning for School Improvement (1997-
ongoing). JICA through the MoNE’s Division
of Junior Secondary Education.
Areas: North Sulawesi and Central Java
The objective of this project is to improve the
quality of education by strengthening bottom-
up planning skills and processes to promote
community participation and school-based
management.
Activities include holding planning meetings
and facilitator workshops, establishing an edu-
cation planning committee in each participat-
ing kecamatan, holding workshops on local-
level quality improvement planning, and de-
veloping kecamatan basic education im-
provement plans.
BEP (MORA)
Basic Education Project – Ministry of Reli-
gious Affairs. Asian Development Bank
(1997-2002).
Areas: West Java, Central Java, East Java,
Lampung, NTB, and South Kalimantan
The objective was to upgrade the quality of all
madrasahs serving primary and junior secon-
dary students to provide better education, par-
ticularly to girls and the poor. This was the
first donor project to focus solely on ma-
drasahs. Previously only about 10 percent of
donor resources were channeled to madrasahs
through MoNE projects.
This project had three components: improving
quality, promoting equitable access, and insti-
tutional strengthening. The project was de-
signed to help the madrasahs adjust to their
new task. Up until 1994, madrasah education
had focused solely on religion. After 1994,
many madrasahs used both the MoNE curricu-
lum and the MoRA curriculum. The project’s
118
Volume 2
quality improvement activities focused on the
subject knowledge and teaching skills in core
non-religious subjects of madrasah teachers
and introduced a six-month certification proc-
ess and in-service program through cluster-
based training. Equitable access was increased
by rehabilitating schools and funding scholar-
ships for the poor, particularly girls. MoRA
management was strengthened at all levels.
School accreditation, management, and super-
vision were improved by the production and
provision of training and manuals. The MoRA
also used a model approach in which selected
schools were upgraded to provide model ma-
drasahs that demonstrated good teaching prac-
tices and good school management.
Upgrading involved the rehabilitation of
schools and the provision of materials such as
libraries, laboratories, and extra classrooms.
CCP
Curriculum Capacity Project (1998-2000).
UK through Balitbang.
Area: Central MoNE and Jakarta
The objective of the CCP was to develop staff
capacity in the MoNE to manage, develop, and
evaluate the curriculum.
Activities included short training courses, both
in-country and overseas, research and field
studies to improve the curricula in core sub-
jects, and the development and implementa-
tion of a curriculum evaluation and
development cycle.
SJSE
Second Junior Secondary Education Project
(1997-2003). Asian Development Bank
through the MoNE’s Division of Junior Sec-
ondary Education.
Areas: East Kalimantan, South Kalimantan,
and Central Sulawesi
The objectives of the SJSE were to increase
junior high school enrollment, to upgrade gen-
eral junior high schools and madrasahs, and to
build institutional capacity.
Activities included strengthening school man-
agement and supervision by providing block
grants (BOMM) to 1,000 junior secondary
schools, providing in-service training to teach-
Chapter 3
ers and administrators, and enhancing re-
sources such as libraries, science laboratories,
textbooks, and teaching materials. The project
also trained district and provincial managers to
monitor the provision of junior secondary edu-
cation.
WJBEP
West Java Basic Education Project (1998-
2003). World Bank through the MoNE’s Di-
rectorate of Primary and Secondary Educa-
tion.
Areas: Selected sub-districts within all districts
The goals of the project were to improve the
quality of primary education, to expand access
to the JSE in poor and remote areas, and to
strengthen planning and management of the
education system at all levels. The project was
the first to focus on decentralization and im-
plementation to the district level with support
from the province. Primary-level quality im-
provement activities focused on rehabilitation,
school consolidation, and teacher re-
deployment; training for teachers, principals,
supervisors, and community leaders; the pro-
vision of books, teaching aids, and materials;
scholarships for poor students; and fellowships
to upgrade teachers’ credentials.
Activities to improve quality in junior secon-
dary schools included school construction us-
ing a community-managed approach, contract
teachers, in-service training for teachers, prin-
cipals, supervisors and community leaders,
and the provision of books and scholarships to
poor children.
Management was strengthened at the district
and province level through school mapping,
the integration of all ministries’ activities in
basic education, an assessment of staff capac-
ity, and administrative retraining of staff at the
district and province level to enable them to
manage the project.
DPAP
Development Planning Assistance Project
(1998-2001). Policy Studies. CIDA through
BAPPENAS.
119
Quality Assurance and Improvement
BEP II
Sumatera Basic Education Program (1999-
2004). World Bank through the MoNE’s Di-
rectorate of Primary and Secondary Education
Areas: North Sumatra, Riau, and Bengkulu
The objectives and activities of the BEP II are
the same as for the BEP I as described above.
BEP III
South Sulawesi and Eastern Islands Basic
Education Program (1999-2004). World Bank
through the MoNE’s Directorate of Primary
and Secondary Education.
Areas: South Sulawesi and Maluku
The objectives and activities of the BEP III are
the same as for the BEP I as described above.
REDIP
Regional Educational Development and Im-
provement Project (1999-2001). JICA
through Balitbang.
Areas: Central Java and North Sulawesi
(seven districts, 15 sub-districts in the pilot
phase)
The objectives of this project are to improve
the quality of junior secondary education by
building the capacity of local education ad-
ministration and schools and by increasing
community awareness of and participation in
education.
The project’s activities included two compo-
nents: (i) the development of the capacity of
sub-district committees and (ii) a choice of one
from five school-level interventions such as
cluster-based training, textbooks, block grants,
and parent council development. The school
grants that were introduced under the REDIP
are managed at the kecamatan level and are
the same for all schools in the kecamatan. The
sub-district committee plans all kecamatan-
level activities and writes and costs proposals
for funding with the help of project consult-
ants. The committee then provides technical
assistance to the grantees to support the im-
plementation of grants.
CLCC
Creating Learning Communities for Children
(1999-ongoing). UNESCO/UNICEF through
Education Sector Review Volume 2

the MoNE’s Directorate of Primary and Sec- the MoNE’s Directorate of Primary and Sec-
ondary Education ondary Education.

Areas: Central Java, East Java, and South Su-
lawesi
The objective of the CLCC is to develop mod-
els to improve the quality of primary schools
through active teaching and learning as well as
school-based management and community
participation.
Activities include providing models for child-
friendly schools, assessing school-based
training trainers in active learning, providing
packages of training, grants, and other inputs
to participating schools, and conducting a
community mobilization media campaign to
raise awareness of the importance of educating
children.
Areas: NTB and Bali
The objectives of the DBEP are to create a
model for increasing equitable access to nine
years of basic education for all children by
making proposal-based grants to schools for
rehabilitation and quality improvement, mak-
ing grants to districts for education develop-
ment and improvement, and creating a unit
within the MoNE to track the impact of decen-
tralization on school quality and on the provi-
sion of education services at the district level.

DBEP
Decentralized Basic Education Project (2003-
ongoing). Asian Development Bank through

120
Chapter 3
Appendix 3.2. A Quality Management Model
The balanced scorecard is a concept that helps
managers at all levels to monitor results in
their key areas of responsibility. An article by
Robert Kaplan and David Norton entitled "The
Balanced Scorecard - Measures that Drive Per-
formance" in the Harvard Business Review in
1992 sparked interest in the method and led to
their business best selling book, The Balanced
Scorecard: Translating Strategy into Action,
published in 1996. Since that time, many
businesses, school districts, and schools in the
United States, Australia, and England have
adapted this method for quality management.
Basically, the balanced scorecard is a method
of designing, organizing, and communicating
performance measures across three to five di-
mensions utilizing both short- and long-term
time horizons.
For each dimension, there are a set of mini-
mum service standards and associated key per-
formance measures that include both “lead”
and “lag” indicators. In brief, “lag” indicators
describe what has been accomplished so far.
For example, students’ scores on Indonesian
language tests are a lag indicator. “Lead” in-
dicators predict future performance. For ex-
ample, time spent by students on reading
improvement programs such as “sustained si-
lent reading” or “writing across the curricu-
lum” is a predictor of their improved scores on
121
Quality Assurance and Improvement
the language arts portion of future examina-
tions.
The Balanced Scorecard
Standards should be set and measured in di-
mensions that capture the values and priorities
of the education system. For example:
x Finance: Including the human, mate-
rial, and financial resources that are
provided to schools (and districts), the
flow of provisions/funds from the
point of origin to schools, and public
accountability for expenditures.
x Basic Rights: Minimum conditions of
learning to which every child has the
right such as safe and healthy school
buildings and certified and trained
teachers.
x Stakeholder Satisfaction: Student
achievement, parental satisfaction with
the results of their children’s school-
ing, and the accomplishment of district
and national goals and targets.
x Governance and Management: Proc-
esses for making policies/regulations/
rules, transparency in decisionmaking,
accountability for decisions, and
community participation.
Education Sector Review Volume 2

Table 1 Indicative Indictors for Education System Balanced Scorecard

Finance Basic Rights: Stakeholder Satisfaction: Governance and Man-
agement:
Lag indi- Lead Indica- Lag Lead Indica- Lag indica- Lead Indica- Lag indi- Lead Indica-
cators tors indicators tors tors tors cators tors
District (ser- % APBD Proportion Numbers Number of Numbers of Number of Timely Number of
vice man- actually of school fi- of class- community out-of- community delivery public ac-
agement) spent on nance pro- rooms in- based school school chil- forums to of goods count-ability
non-salary vided by stead of rehabilitation dren discuss edu- and ser- forums
education funds repair efforts cation con- vices to
cerns schools
District
Proportion Proportion Number of Student per- Number of Leakage education
of schools of unquali- teachers par- formance on “good prac- of funds service
receiving fied teach- ticipating in standardized tices” and intended structure
minimum ers teacher train- tests local innova- for edu- appropriate
per student ing programs tions identi- cation for current
costs fied units functions

Perform- Numbers of Teachers Appropriate

ance-based schools ac- Proportion paid on payroll and
budget for credited of un- time and teacher
district edu- accredited in the management
cation ser- schools with correct system
vice. school im- amount
provement
plans

School (ser- Proportion Integrated Minimum Plans for Student Numbers of School Attendance
vice provi- of school school conditions school im- achievement teachers par- rules en- records by
sion) finance budget of learning provement to on tests of ticipating in forced teachers and
provided met MCL basic skills teacher train- students
by funds ing

Minimum School- Teachers

per stu- based quality and stu-
dent costs improvement dents
received program provided
on time such as with
and in full “writing needed
amount across the materials
curriculum” and sup-
or remedial plies on
program for time
failing stu-
dents

Standards and the Balanced Scorecard

Minimum service standards and associated
“lag” indicators can be set for each of the four
dimensions by the national level. The districts
and/or education units themselves should set
the “lead” indicators linked to the “lag” indica-
tors. Each dimension should have no more
than three standards each with one or two key
“lag” performance indicators. The service
standards, indicators, and measures should be
standardized and set by the national govern-
.
ment. The targets can be set nationally or ne-
gotiated with districts.
For each dimension, districts or schools can
then be positioned along a continuum based on
their performance on the key “lag” indicators.
This is the basic concept behind Indonesia’s
current school accreditation and district moni-
toring programs

122
Chapter 3 Quality Assurance and Improvement

Figure 1 The Balanced Scorecard Continuum

Below Standard Above Standard

Minimum Service Standard

By adding a second dimension for perform-
ance on lead indicators, each school or district
can be described using the grid in Figure 2.
Their performance can be reported and veri-
fied as part of each funding cycle. Taken to-
gether, the two dimensions yield four
categories of districts or education units: good
and getting better, good and getting worse, bad
and getting better, and bad and getting worse.
Different interventions can then be determined
for each category of district or education unit,
which illustrates how the entire education sys-
tem has moved further away from the supply-
driven, one-response-for-all model.

123
 Education Sector Review Volume 2

Figure 2 Using the Balanced Scorecard

Better than last performance evaluation

BAD SCHOOLS/DISTRICTS GETTING GOOD SCHOOLS/DISTRICTS GETTING

BETTER BETTER

x Look for innovation and best x Block grant financing

practices x Most resourcing through funds
x Eligible for increased funding (rather than materials or in-kind
through block grants services)
x Recognize achievement in public x Eligible for special grants to be-
forums come “service providers”

Below Standard Above Standard

Minimum Service Standard

BAD SCHOOLS/DISTRICTS GETTING GOOD SCHOOLS/DISTRICTS GETTING

WORSE WORSE

x Close attention from higher au- x Very common in newly decentralized

thority systems
x Earmarked funds x Examine regulatory framework to re-
x Intensive capacity building move policies that may be inhibiting per-
x At risk of losing accreditation formance (e.g. financing formula)
x Site visit to determine cause for per-
formance drop and collaborate on
remediation

Worse than last performance evaluation

124
Chapter 3 Quality Assurance and Improvement

Appendix 3.3. A Case Study Of Project-Based School

Rehabilitation

Table 1 Number of Classrooms Needing Rehabilitation 2000/2001

Light Moderate Heavy Total
Type and Level of school Num % Num % Num % Num %
Primary Level
PS public and private 377,198 41.6 316,915 35 212,280 23.4 906,393 100
MI public 6,005 59 2,752 27 1,430 14 10,187 100
MI private 56,348 48.4 38,365 33 21,675 18.6 116,388 100
Total Primary Level 439,551 358,032 235,385 1,032,968
JS Level
JS public and private 157,753 87.5 16,415 9.1 6,118 3.4 180,286 100
MTs public 9,360 73.6 2,221 17.5 1,135 8.9 12,716 100
MTs private 28,183 60.8 12,902 27.8 5,280 11.4 46,365 100
Total JS Level 195,296 31,538 12,533 239,367
Source: ADB MESA report (ADB, 2003).

Primary schools in Indonesia are not in good
condition. According to an inventory of assets
conducted by the MoNE in 2000, more than
half of all public general school classrooms
(530,000) were in fair or bad condition, and
about 14 percent of the junior secondary class-
rooms (22,600) needed moderate or heavy re-
pairs (see Table 1).
The government responded to the findings of
the 2000 survey with a two-pronged strategy,
which, according to the Education for All draft
costing tables, aims to complete the rehabilita-
tion of classrooms by 2015 through a series of
projects. In 2001, Rp 3.55 trillion44 was spent
on the school rehabilitation component of the
Bantuan Khusus Sekolah (BKS) program,
which also expended a considerable sum on
scholarships. In addition, the centrally funded
Imbal Swadaya program provided Rp 267 bil-
lion in 2003 for both new school construction
and classroom rehabilitation (Rp 30,000 in 75
percent matching grants to 8,900 schools).
Also in 2003, a significant DAK transfer (Rp
625 billion) was made specifically for school
rehabilitation. In addition, a centrally funded
program aimed at remote and conflict areas
(Daerah Tertinggal Bencana Alam dan
Kerusuhan) spent a portion of Rp 241.23 bil-
lion on rebuilding and rehabilitating class-
rooms. Several donor-financed projects have
also included a classroom rehabilitation com-
ponent since 2000 (see Table 2).
Taken together these massive efforts have re-
habilitated about 30 percent of the classrooms
that needed the heaviest repairs or about 13
percent of the classrooms that needed heavy or
moderate repairs. According to figures pro-
vided by the government and donors, 82 per-
cent of the junior secondary classrooms that
needed moderate to heavy rehabilitation were
repaired. The huge repair bill is due primary
to two factors  sub-standard construction
and no routine maintenance. Future repair
bills can be lowered somewhat by including
maintenance costs in the formula for calculat-
ing a school’s operating budget. Indeed, if
minimum maintenance is not carried out, the
classrooms will require massive rehabilitation
about every 10 years. Sub-standard construc-
tion is due in part to a lack of competent con-
struction engineers and construction workers
and to corruption in various forms, such as
contractors billing for materials that meet con-
struction specifications but substituting infe-
rior materials on site.

44
Rp1.144 trillion from the oil subsidy money was
used in 2001, with another Rp 2.41 trillion coming
from other sources in 2003.

125
Education Sector Review Volume 2

Table 2 Classrooms Rehabilitated by Government and Donors, 2000-2003

Primary Classrooms Rehabili- Junior Secondary Classrooms
Donor/Project tated Rehabilitated
GoI Projects
BKS (2001,2003) 32,000 18,000
Imbal Swadaya (2003) 8,900 8,900
Pemberdayaan Di Daerah 6,220 2,775
Tertinggal (2001,2002,2003)
ADB
MoRA (1996-2002) 1,210 920
RNG
SIGP I (2001, 2002) 8,865 1,250
SIGP II( (2002) 8,000 1,200
World Bank
Basic I, II, III 12,000
JSE (1998-2003) 3,340
TOTALS 77,195 36,385
Sources: ADB Project Completion Report BDP Project, BKS implementation Unit, Ibdal Swadaya Implementation
Unit, SIGP Implementation Unit, JSE Implementation Unit, Basic I, II, and III monitoring reports, JBIC Evaluation Re-
port, MoNE Proyek Pemberdayaan Pendidikan, Didaerah Tertinggal, Benchana Alam dan Rerusuhan Jakarta year end
summary reports.
Note: This assumes two primary and two JSS classrooms per school.

Transition from Projects to Program
The advent of the new planning period pre-
sents policymakers with a historically unique
opportunity to change the country’s quality
improvement strategy from the current series
of discrete and disconnected projects into a
cogent and comprehensive quality manage-
ment program that integrates quality control
and quality improvement into the routine op-
erations of schools and districts.
Quality improvement projects have accom-
plished a great deal in a few areas, but the unit
costs and the need for high levels of technical
competence to sustain and propagate the inno-
vations have cost more than Indonesian politi-
cians have been willing to spend. Projects still
have a vital role to play in trying out new
ideas for improving teaching, for pilot testing
school quality management models on a small
scale, for determining the management and
technical capacity required to implement par-
ticular quality control approaches, and for in-
creasing the supply of quality improvement
service providers. The projects approach is
simply not up to the job of improving the qual-
ity of this enormous and varied education sys-
tem overall.

126
 Chapter 4: Teacher Management System
Teachers are the most important asset in Indo-
nesia’s education system, both because they
are the primary determinant of school per-
formance and because their salaries consume
most of the public spending on education. In
this chapter, we argue that a new paradigm for
teacher management is necessary to ensure
that Indonesia derives maximum value from
its teachers in terms of the academic achieve-
ments of their students while adhering to the
principles and legal requirements of decen-
tralization.
The Indonesian debate about teachers, teach-
ing, and teacher management predates decen-
tralization by at least three decades and many
of the teacher management concerns discussed
in this chapter are not new, nor do they all
arise directly from the post-decentralization
forms of education governance, management,
and financing discussed in previous chapters.
Some persistent issues that need to be resolved
in the era of decentralization include teachers’
remuneration, incentives, career structure and
promotion, their recruitment and deployment,
their education and competence, their career
development and in-service training, and their
empowerment in the context of school-based
management. Indeed, the empowerment of
schools and district governments under decen-
tralization provides a welcome opportunity to
revisit long-standing issues and to examine
how introducing a new paradigm into teacher
management can contribute to improving
teaching and school performance.
Since decentralization went into effect in
2000, the MoNE has been employing a two-
part strategy for improving the quality of
teachers and teaching. The first part sets stan-
dards for teachers and head teachers and de-
velops quality assurance monitoring systems;
the second part builds the capacity of provin-
cial institutions and district governments to
carry out their new roles relating to teacher
management. This approach was described in
the Government of Indonesia’s Strategic Plan
for Education 2002-2004 and relies on “in
127
creasing the qualifications and technical ca-
pacities of teachers and head teachers as a way
of increasing the professionalism and improv-
ing the welfare of teachers, enabling them to
implement a new curriculum that aims to
make students more creative and to make
teaching more efficient and effective.” In or-
der to “achieve the education goals, these
strategies are to be supported by evaluation
mechanisms that will function as a quality
control system and by increased supervision of
schools and accountability for school perform-
ance.” In 2003, the MoNE began working in
collaboration with line agencies (such as the
MoHA, the MoF, the BAKN, and the MoRA)
to develop a clear regulatory framework for
teacher management, including assigning re-
sponsibilities for hiring teachers as civil ser-
vants or as contract teachers.
We believe that the regulatory framework,
standards, and monitoring systems currently
being developed by the MoNE, though ambi-
tious, do not go far enough. This chapter iden-
tifies several key teacher management issues
and recommends three systemic actions that
need to be taken: (i) setting teacher profes-
sional standards and performance monitoring
criteria that are based on their classroom and
school performance; (ii) developing a new
paradigm of career-long teacher professional
development that is school-based and class-
room performance-led and (iii) de-linking the
management of teachers and their conditions
of employment from the civil service and cre-
ating a teaching service that reflects the needs
of the educational system and the development
of teaching as a profession. The aim of these
recommendations is to encourage the devel-
opment of a professional teaching force that is
consistent with school-based management and
improves school performance, and students’
learning outcomes.
This paper draws heavily on the work of sev-
eral teacher policy reform groups that existed
from 1999 onwards. The proposals from these
groups are reflected in the National Commis-
Education Sector Review
sion on Education’s 2001 report called “Edu-
cation Reform in the Context of Regional
Autonomy: The Case of Indonesia” and in the
Government of Indonesia’s Strategic Plan for
Education 2002-2004. The analysis of teacher
management issues in this chapter uses the
principles of decentralization and school-
based management systems to review progress
to date, to identify areas of concern, and to
propose some possible ways forward. It dis-
cusses the information, incentives, and ac-
countability systems relating to teachers that
will be needed to support decentralized man-
agement systems and the goals to improve
school quality.
The analysis in this chapter is based on: (i) a
review of Indonesia’s laws, regulations, policy
documents, implementation guidelines, project
reports, statistics, and media surveys; (ii) an
international literature review; (iii) interviews
with key stakeholders and focus group re-
search in Jakarta, Bandung, Makassar, and
Bandar Lampung (with additional focus
groups to be conducted in three rural districts
by the end of November); and, (iv) a forum
held by the Government of Indonesia and its
development partners and feedback on early
drafts of this chapter from experts in Indonesia
with extensive knowledge and field experience
of the education system. The chapter reviews
proposed strategies, current practices and rele-
vant international experience to construct a ca-
reer-long teacher development and
management framework. Some elements of
this framework are already being discussed by
the MoNE and various districts, while others
represent a major departure from the current
and proposed teacher management systems.
The chapter is organized in the following way.
First we look at some key characteristics of
schools and teachers in the changing context
in Indonesia. Second, we review the main
changes in teacher management arising from
decentralization and education laws, stake-
holders’ perceptions of these changes, and the
initiatives being taken by district governments.
Third, we discuss the main issues related to
teacher management in Indonesia and look at
some lessons from international experience.
128
Volume 2
Finally, we propose some policies and strate-
gies and outline the kind of timeframe that is
likely to be required to implement the pro-
posed policies.
The Changing Context of Teacher
Management in Indonesia
At the time of the decentralization reform, dis-
trict governments inherited a school system
that operated according to centrally deter-
mined rules governing the employment and
deployment of teachers, the curriculum, teach-
ers’ education, school inspections, teachers’
performance, and information systems. The
system was designed and structured in such a
way that districts and provinces fed education-
related information upwards to the central
government (without receiving any informa-
tion in return. In turn, the central government
made all decisions pertaining to the procure-
ment and distribution of all education inputs
such as school buildings, books, teachers, and
in-service training.
However, the situation was more complex
than this summary might indicate. For exam-
ple, public primary schools (sekolah dasar)
were managed by the MoHA at the district
level; specifically, the local government was
responsible for the 3Ms (manpower, money,
and materials) for primary schools, while the
curriculum and quality issues were managed
by the MoNE representative at the district or
province level. On the other hand, the MoNE
managed public secondary schools. Public
schools in the madrasah system were, and
continue to be, centrally managed by the
MoRA. Public teachers were, and still are,
civil servants (pegawai negri) who taught and
still teach in public, madrasah, and private
schools. In addition, there were contract
teachers (mostly employed through central
projects financed by donors and “voluntary”
teachers who were paid an honorarium (guru
honor) from the parents’ contribution to their
children’s school or through the school’s
foundation (yayasan). Contract teachers
mostly taught in public schools, while volun-
tary teachers could be found in both public
and private schools.
Chapter 4
Then, as now, there is a wide variation among
districts in their capacity to meet national tar-
gets and to provide a supportive environment
for teachers and for schools. Variations in
population density, financial resources, admin-
istrative capabilities, and progress in meeting
the national education goal (nine years basic
education for all) make it impossible for cen-
tral policymakers to develop an effective one-
size-fits-all formula for teacher development
and management. For example, some districts
are experiencing periodic civil disturbances
(these include not only Aceh but also districts
in Central Sulawesi, Maluku, and parts of
Papua), thus making it difficult for them to
employ and retain teachers. In other districts,
where most of the population lives in accessi-
ble areas, it is relatively easy to provide
enough schools, to staff them adequately, and
to give teachers regular professional support.
However, many districts have low population
densities and limited infrastructure, which
makes the task of teacher deployment much
more difficult.45
Decentralization provides an opportunity for
each district to create a teacher management
and development system that meets its unique
needs, but few districts have the financial or
technical capacity to do so. For example, in
the province of East Kalimantan, some dis-
tricts are able to equip their schools and to
provide teachers with financial incentives and
access to professional support systems even in
remote areas, but other districts do not have
the same level of local resources to draw upon.
There are many rural, remote districts such as
those in the eastern islands and in mountain-
ous environments such as in Papua, Java, Ka-
limantan, and Sulawesi that have difficult
decisions to make about how best to spend
scarce resources, to provide incentives for re-
45
Although four provinces have population densi-
ties between 500 to 1000 people per square kilome-
ter, more than half of the provinces have
population densities of fewer than 100 people per
square kilometer. The extremes are Papua with five
people and DKI Jakarta with 12,645 people per
square kilometer.
129
Teacher Management System
cruiting teachers to remote schools, and to de-
velop school support systems to meet the
needs of small schools in isolated areas or
conflict plagued environments. Districts in
these situations may not have enough techni-
cal and financial resources to meet the needs
of large numbers of remote schools, although
the districts within any given province often
vary considerably in the amount of resources
that they have available to provide incentives
to teachers (according to provincial economic
data from The MoNE’s Research and Devel-
opment Center (Balitbang). On the other
hand, in other parts of the country, there are
large urban districts where land is scarce and
past policies created multiple primary schools
on a single site, each with its own administra-
tive system. Most of these local governments
are now streamlining these schools into a sin-
gle institution and teacher management sys-
tem, thus reducing the numbers of head
teachers, administrative staff, and specialist
teachers as well as rationalizing the use of
various physical resources.
Some districts are beginning to reorganize
their teacher management systems to align
them with the newly decentralized decision
making structure by adopting information sys-
tems that are more open to the public by in-
volving local communities in education
decision making, and by setting staffing and
performance targets that are appropriate to
their particular circumstances. Now that they
have greater control over their budgetary re-
sources, district governments are becoming
more aware of inefficiencies that were inher-
ent in many previous policies. For example,
in the past, primary schools were expected to
employ a minimum of nine teachers regardless
of the number of students that were enrolled,
while in junior secondary schools, teachers
were often employed to teach only one subject
regardless of the school’s size and need.
Some districts are already distributing and us-
ing teachers more efficiently in their schools.
Indonesia is not alone in struggling with
teacher management issues under
decentralization. A group of education
planners in several Latin American countries
assessed the impact of different policies to
Education Sector Review Volume 2

Box 4.1 Cost-effective Strategies for Raising Academic Achievement

A group of education planners from a number of Latin American countries examined the cost-effectiveness
of about 40 policy interventions that aimed to raise students’ academic achievement. The group measured the
cost-effectiveness of the interventions according to the estimated impact of the intervention on academic
achievement (as measured by a standardized test of mathematics and reading at the primary grade 6 level),
the probability of the intervention being properly implemented, and the estimated cost of implementing the
intervention. Of the 40 policy interventions examined, the top five most cost- effective interventions were
(starting with the best): (i) assigning the best teachers to the first grade, (ii) enforcing the official length of
the school year, (iii) not switching classroom teachers during the school year, (iv) testing 10 percent of grade
4 students annually and distributing the results to teachers, and (v) decentralizing school management. The
first three of these interventions are not very costly but greatly increase teachers’ productivity and school per-
formance.

The group found that four policy interventions had the greatest possible impact on improving school quality
and learning achievement. These were (starting with the most effective): (i) providing teaching and learning
materials and training teachers to use them, (ii) providing self-directed learning materials to teachers without
any accompanying teacher training, (iii) providing a package of interventions to at-risk schools including
self-learning materials, training in active and cooperative learning, hands-on workshops on modern teaching
methods community involvement in school decisionmaking, school-based management, formative evaluation
of the intervention package, and systematic testing and feedback, of student learning, and (iv) paying teach-
ers higher salaries to work in rural areas and assigning the best teachers to the first grade of primary school.
All of these interventions have costs attached, and the probability of them being fully implemented is lower
than the chance that the five most cost-effective interventions above will be implemented.

Source: Schieflebein et al, 1998.

impact of different policies to improve school
quality that the governments of these countries
had introduced over time (Schieflebein et al,
1998). The education planners ranked the im-
pact of these policies on student achievement,
taking into account the cost and degree of dif-
ficulty of introducing each innovation. Sev-
eral of these have implications for teacher
management. The results of this exercise are
summarized in Box 4.1.
One of the key challenges in teacher manage-
ment is estimating the number of teachers that
will be needed in the future. Districts may
require financial and technical assistance from
higher levels of government so that they can
build their capacity to gather information
about the supply of and demand for teachers in
the future. The demographic shift caused by
declining birthrates and rising primary and
junior secondary school enrollments implies
that there is likely to be a decrease in the de-
mand for primary school teachers and an in-
crease in the need for secondary school
teachers in the future. The central and provin-
cial governments might consider helping dis-
tricts to produce some school-age population
projections (say, for 10-15 years ahead) and
then to match these to projections of primary
school enrollment rates and to the qualifica-
tions and age group profiles of the existing
population of certified teachers.
The decentralization legislation clearly allo-
cates the responsibility for teacher manage-
ment to the districts. Given the vast range of
different types of schools and of varying dis-
trict capacities, the national and provincial
governments will have to continue to play an
important role in teacher management and de-
velopment in the medium term. For example,
the provincial quality assurance institute de-
scribed in Chapter 3 on quality can help dis-
tricts to build their capacity to monitor
teachers’ performance so that this monitoring
system can contribute to the lifelong profes-
sional development of teachers and head
teachers.

130
Chapter 4
Allocation of Teacher Management
Functions
When teacher management systems are chang-
ing, this can be a good opportunity to imple-
ment new ways to achieve education goals.
However, during the period of transition there
can sometimes be tensions and opportunistic
behavior at the school and district levels in the
appointment, deployment, and promotion of
teachers. Because of the magnitude of the
changes that have been taking place since
2001, there is likely to be a certain amount of
confusion and upheaval as local governments
redefine their roles and relationships, debate
how best to allocate and manage resources,
and learn to become more democratic and ac-
countable to civil society. We look at some of
these changes in this sub-section through the
lenses of the regulations that govern the man-
agement of teachers, the perceptions of stake-
holders, and the experiences of district
governments.
In a decentralized teacher management sys-
tem, the main role of the central government
should ideally be to develop a national teach-
ing service that sets minimum teaching stan-
dards and minimum salary scales and develops
guidelines for promotions and incentives. The
provincial education units would be responsi-
ble for ensuring that districts were able to
meet their statutory obligations for providing
basic education of a sufficiently high quality.46
They would also be equipped to advise dis-
tricts on school improvement and teacher de-
velopment and to ensure that teachers could be
deployed across districts if and when required.
District governments would be responsible for
the employment and deployment of teachers
and for the payment of their base salary (the
national minimum) and any additional benefits
and incentives, for monitoring teacher per-
formance, and for ensuring that teachers had
regular access to professional development
programs linked to their school activities.
46
This proposal should be vigorously debated as it
does not conform to the principles of decentraliza-
tion in Indonesia.
131
Teacher Management System
Changes in Teacher Management
Systems as a Result of Decentralization
The implementation of the decentralization
laws is changing how civil servants, including
teachers, are managed. At the time when de-
centralization was introduced, large numbers
of civil servants who up until then had been
employed by central line agencies, such as the
former Department of Education and Culture,
were reassigned to district and provincial edu-
cation units along with budget allocations to
cover their salaries. A freeze and budgetary
ceiling on civil service recruitment (including
public teachers) have been in place ever
since.47 The government has begun to intro-
duce civil service reforms in line with the de-
centralization of governance and management
structures, including revisions to salary scales.
It is also reviewing some teacher management
systems, especially those relating to perform-
ance standards and recruitment and deploy-
ment. Because of ambiguities in the
decentralization law and regulations regarding
the assignment of some key teacher manage-
ment functions, there is still some overlap and
duplication between the districts and those
agencies who were previously responsible for
carrying out those functions in the pre-
decentralization era.
The implementation of the school-based man-
agement of education and the creation of dis-
trict education boards is changing the nature of
teachers’ accountability and their incentives to
perform well. These changes mean that the
decisions about a school’s resources and goals
are made by those who know are in the best
position to understand the circumstances that
prevail at that school, which is a highly desir-
able outcome. However, they also put a heav-
ier burden on teachers, school principals,
school committees, and parents to work to-
gether to assess the school’s performance and
to achieve better student learning outcomes.
A number of projects are currently helping
47
However, the recruitment of contract teachers is
a special case. This is discussed later in the chap-
ter.
Education Sector Review
teachers, head teachers, and school supervisors
to develop the necessary capacity to meet the
requirements of school-based management
and to improve school performance. District
education managers are receiving technical
support and training under ongoing MoNE
projects (such as the DBEP, the BSE, the JSE,
and the Unit Facilitasi in areas of school map-
ping), teacher deployment, and quality im-
provement planning to help them to fulfill
their new obligatory functions. However,
there are over 420 district governments in In-
donesia with very different capacities, and not
all of these activities are taking place in all
districts, which means that progress is very
uneven.
Responsibility for the Employment and
Deployment of Teachers
Under the decentralization laws, the district
government is responsible for employing all
public school teachers except those in ma-
drasah schools. This includes all the civil ser-
vice teachers (pegawai negeri) in public and
private schools (mostly secondary schools)
who were previously hired and paid for by the
central government. Wages for public teach-
ers are transferred to the districts’ budgets
(APBD) as part of their block grant (DAU)
from the central government. There are also
districts that have hired contract teachers
(guru kontrak) as part of projects funded by
loans made by donors to the central govern-
ment. The salaries of these teachers do not
appear in the district budget but are funded by
these MoNE-managed projects through the
DIP mechanism. The status of these contract
teachers will be reviewed when these donor-
funded projects end, although attempts by do-
nors to design an exit strategy have been pre-
empted by the central government’s decision
to recruit an additional 190,000 contract
teachers, which it is no longer supposed to do.
The salary levels and promotional and reward
systems for civil servants are still set centrally,
although many districts provide teachers
within their jurisdiction with supplementary
132
Volume 2
benefits and incentives. While the districts
have the option to dismiss contract teachers48
or not to renew their contracts, it is still not
clear whether or not district governments can
reduce the teaching force by dismissing some
civil service teachers, as they might want to do
if they were to rationalize their teacher/student
ratios or to adjust to lower enrollment due to a
declining school-age population. Currently,
many teachers are under the impression that
they cannot apply for vacancies in a different
district, but this may be because districts want
to retain the civil servants whom they already
employ. Nor are there any good mechanisms
by which schools and districts can advertise
teaching vacancies beyond district boundaries
to recruit those teachers who may be best
suited to that particular school.
Although district governments are responsible
for hiring teachers and paying their salaries,
some ambiguities remain in the system. For
example, madrasah teachers who are civil ser-
vants are still managed by the MoRA which,
unlike the MoNE, has not been decentralized.
Districts, through the MoHA, have always
been responsible for deploying teachers, but
with the establishment of school committees
and education boards, schools and districts
may take on a bigger role in selecting and ap-
pointing teachers, especially head teachers.49
District governments are bound by the central
government’s zero recruitment policies for the
civil service, which have been implemented
over the past few years. This applies as much
to teachers as to other civil servants. For ex-
ample, if a district government wishes to hire
any additional teachers, the district must pay
for them from their own resources. The Min-
istry of Finance will not grant districts any in-
48
Contract teachers are not civil servants. They are
contracted to the MoNE for a period of three years
at fixed rates.
49
Three districts in Flores, with the support of
AusAID, are piloting just such community partici-
pation in determining selection criteria for teachers
and head teachers and in participating in the selec-
tion of teachers and head teachers.
Chapter 4
creases in their budget allocations to recruit
additional civil servants (see Chapter 2).
Responsibility for Setting and Monitoring
Teacher Performance Standards
As discussed in Chapter 3 on quality, the
MoNE is developing minimum service stan-
dards for districts’ obligatory functions and
education standards for schools through sev-
eral different parallel processes. Associated
with these activities (or independently of them
in some cases), different units of the MoNE
are developing performance standards that will
affect teachers.
The Directorate of Higher Education has de-
veloped standards that trainee teachers must
meet to be allowed to graduate from the DII
teacher education program (a two-year post-
secondary school teaching diploma needed to
teach in primary schools) and is expecting to
continue this exercise for the other teacher
preparation programs under its accreditation
control (such as the DIII, which is a three-year
diploma required to teach in junior secondary
schools, and S1 or undergraduate degree).
These graduating standards apply to the ac-
creditation of teacher education programs and
define in some detail what an Indonesian
graduate teacher should know and be able to
do. Complementary to this, the Directorate of
Education Personnel is preparing teacher
competency standards for serving teachers to
be used in assessing their performance and
identifying their professional development
needs.
It is expected that these competency standards
will be used by quality assurance institutes in
the provinces acting on behalf of the MoNE.
The role of these quality assurance institutes is
still being developed, and, as yet, no clear
guidelines have been developed for their
monitoring activities, but it is likely that these
will be based on criteria related to the obliga-
tory functions and minimum service standards
that are also being developed.
133
Teacher Management System
Responsibility for Teachers’ Professional
Development and Career Development
Initial teacher preparation remains the function
of universities and teacher training institutes
that are accredited by the MoNE’s Directorate
of Higher Education. This applies also to pro-
grams for upgrading teachers’ qualifications
and to further education courses for teachers.
There are ongoing discussions about how to
make both the universities and the accrediting
board more autonomous and how to make the
process of accreditation more demanding and
competitive so that teacher education pro-
grams in universities will become more re-
sponsive to the needs of schools (the service
providers) and district governments (the em-
ployers). Where the responsibility rests for the
continuing professional development of teach-
ers is more ambiguous. Most school-based
and cluster-based professional development
activities carried out in Indonesia (for which it
has a well-earned reputation) were supported
in the past by projects funded by donors or by
the MoNE. Now districts are responsible for
providing in-service training and professional
support activities, but few have the resources
or the motivation to do so. Provincial teacher
training centers (Balai Pelatihan Guru and
Pusat Peninkatan dan Pelatihan Guru) are de-
concentrated branches of the MoNE and, as
such, are expected to provide both quality as-
surance and in-service teacher education sup-
port to districts.
The ways in which the lifelong education of
teachers relates to their career, promotion, and
incentive structures have not been clearly ar-
ticulated in the past. This needs to be ad-
dressed, especially in the context of decen-
tralization. We will look at these issues in
more detail later in the chapter.
Table 4.1 summarizes the changes in teacher
management functions for public general
schools (not madrasahs) resulting from decen-
tralization.
Education Sector Review
Table 4.1 Teacher Management Functions for Public Schools (except Madrasahs)
Management function
Teacher employment, deployment
x Selection
x Appointment
x Deployment
x Transfer
x Promotion
x Conditions of service (salary
scales, incentive systems)
x Dismissal/rehiring
Teacher performance
x Standards setting
x Performance monitoring
x Sanctions and remediation
Volume 2
after Decentralization
Decisionmaker Decisionmaking Process
Pre-decentralization Post-decentralization
Public teachers: By local govern-
Public teachers: By central ment under national civil service
authority deconcentrated to guidelines
provincial government.
Process governed by civil Contract teachers: Unchanged
service regulations and uses
credit point system Permanent teachers: Unchanged
Contract teachers: Through Temporary teachers: Unchanged
centrally funded projects,
not subject to civil service
regulation
Permanent teachers: By
private foundations, not sub-
ject to civil service regula-
tion
Temporary teachers: By
schools, not subject to civil
service regulation
Primary Primary
Public Teachers: By the Public Teachers: By districts and
MoNe and monitored by dis- schools
trict circuit inspectors based
in sub-districts Contract Teachers: Unchanged
Contract Teachers: By cen- Permanent teachers: Unchanged
trally funded projects
Temporary teachers: Unchanged
Permanent teachers: By
foundations and foundation
inspectors
Temporary teachers: By
schools
134
Chapter 4 Teacher Management System

Decisionmaker Decisionmaking Process

Management function Pre-decentralization Post-decentralization
Junior secondary Public Junior secondary
Teachers: By the MoNE and Public Teachers: By districts
monitored by national circuit
inspectors working out of Contract Teachers: Unchanged
the provincial MoNE offices
Permanent teachers: Unchanged
Contract Teachers: By cen-
trally funded projects moni- Temporary teachers: Unchanged
tored by projects and by
circuit inspectors

Permanent teachers: By
foundation

Teacher professional development
x Initial preparation
x Induction
x Continued professional develop-
ment
Temporary teachers: By
school
Public teachers: By centrally
accredited teacher training Public Teachers: Unchanged
institutions, through public
examinations, by individual Contract Teachers: Unchanged
opportunity through credit
system Permanent teachers: Unchanged

Contract teachers: By cen- Temporary teachers: Unchanged

trally accredited teacher
training institutions, through
public examinations, by in-
dividual opportunity through
project

Permanent teachers: By
school

Temporary teachers: By
school

held that brought all teachers, head teachers,

Stakeholder Perceptions of Teacher
Management
As part of the consultative processes of the
World Bank’s Education Sector Review, a
number of focus group meetings were held to
learn about the experiences and perceptions of
key stakeholders regarding decentralization
and its impact on teacher management issues.
Two initial sets of meetings were held in Ban-
dar Lampung and in Makassar over the course
of a week. Separate focus groups of teachers,
head teachers, and school supervisors all dis-
cussed the characteristics of good teacher
management. In addition, one meeting was
and supervisors together. The focus group fa-
cilitators then discussed the findings of all of
the group sessions with a representative group
of district managers. The district education
officers in Bandar Lampung and in Makassar
chose which teachers and head teachers would
participate in the focus groups on the basis of
sampling criteria agreed between them and the
ESR team. These teachers were representative
of primary and junior secondary schools in the
public, private, and madrasah sectors and in-
cluded both public servants and contract
teachers as well as equal numbers of male and
female teachers. The district managers were

135
Education Sector Review
represented by local government personnel
from the district parliament and education and
planning offices (Dinas Pendidkan, Dinas
Agama, Pemda, and Komisi A).
Here are a few highlights to illustrate the
views that emerged from the focus group ex-
ercise:
x Since decentralization, teaching vacan-
cies are advertised in the local media.
These advertisements provide the public
with information about the position and
location of the job and invite interested
teachers to apply. However, since de-
centralization, it has become more diffi-
cult for teachers to apply for transfers or
promotions out of their original districts.
The teachers and head teachers in the fo-
cus groups were concerned about this.
They also expressed considerable con-
cern about the lack of transparency in-
volved in the appointment, transfer, and
promotion of teachers under decentrali-
zation and about the high cost to indi-
viduals arising from the ”fees” (bribes
and other payments to facilitate results)
that they have to pay to assist these
processes. In many cases, these pay-
ments (in cash or kind) are beyond the
means of teachers who might otherwise
be eligible for a position. The teachers
claimed that this kind of rent seeking has
become worse since decentralization.
x Although this is not a specific impact of
decentralization, teachers were con-
cerned about the infrequency of per-
formance evaluations and the poor
quality of performance monitoring (by
head teachers or district school supervi-
sors). They considered supervision to be
too focused on administrative aspects
and not sufficiently on giving teachers
feedback about their teaching methods.
However, as the teachers also pointed
out, there are few opportunities for pro-
motion or any other incentives for either
school managers or teachers to justify
more frequent performance evaluations.
Parents tend to measure a teacher’s suc-
136
Volume 2
cess by the results of the students’ final
examination and by how many children
are accepted by the secondary school of
their choice. Teachers who have bene-
fited from performance monitoring
pointed out that at least now this is done
at the district level and not far away in
Jakarta, which they saw as an advantage.
On the other hand, the school supervi-
sors, who were formerly accountable for
school monitoring, felt that the district
government was now taking over this re-
sponsibility, leaving them with less of a
role in supervising schools and teachers.
x Except for teachers in schools that are
part of ongoing projects (such as the
BSE, the JSE, and the DBEP) funded by
the national government, there are few
resources or opportunities for teachers to
participate in any kind of professional
development programs (such as in-
service training or workshops). Educa-
tion managers themselves said that dis-
trict education budgets are not large
enough to fund teacher development ac-
tivities on a regular basis.
Further focus group meetings of education
stakeholders are planned over the next few
months in a wider range of districts, including
districts in rural and island areas and districts
with different levels of prosperity and with
different population densities and numbers of
schools. As the first two sessions were held in
urban districts, it is planned to include rural
and remote districts in the next round to get a
balanced perspective.
District-led Initiatives
Many districts are responding with enthusiasm
and initiative to their new responsibilities,
which are giving them a much greater incen-
tive to examine the quality and efficiency of
the education provided within their bounda-
ries. Because resources are now allocated by
democratically elected district parliaments, the
district planning office is taking a greater role
in both preparing budget proposals and de-
fending the allocation of resources.
Chapter 4
These days, education initiatives often origi-
nate within district governments (in other
words, within the leadership of the Bupati
through the Bappeda to the Dinas units), espe-
cially as they examine ways to use their re-
sources more efficiently. Several districts have
been merging several small schools into one,
redeploying school principals and teachers to
understaffed schools based on more efficient
student/teacher ratios, and are discussing the
relative merits of civil service teachers and
contract teachers.50
In cases where schools have been merged and
the number of school principal posts have de-
creased, there is a danger that tensions will
arise between those who lose out and those
who retain their jobs. District governments
are finding ways to deal with these situations –
for example, school principals who had previ-
ously been evaluated and had lost their jobs
due to poor performance as administrators
have been asked to return to teaching. In
some cases, natural attrition by retirement
solves the problem; in other cases, school
principals may have chosen to retire or to seek
other work. School committees in some well-
developed areas have been using their re-
sources to allow teachers to attend in-service
or other professional development programs
(as is happening in several districts in East
Java under the UNESCO/UNICEF project). In
many cases, this builds on practices begun un-
der such projects as the Junior Secondary
Education and Basic Education projects.
Districts now are taking the initiative to focus
directly on teachers’ classroom behavior as a
way of improving school quality rather than
relying solely on physical inputs such as
school buildings. The teacher is seen as being
central to this goal, and thus districts are put-
ting a high priority on ensuring that they have
adequate skill levels. For example, some dis-
tricts have put a temporary embargo on fund-
ing physical infrastructure programs and
50
Based on the pilot activities of the District Basic
Education Project, Unit Facilitasi, the MoNE, and
the Basic Education Project.
137
Teacher Management System
instead are buying books and learning materi-
als.
Need for a New Teacher Management
Framework
Good governance and management require in-
formation, accountability, and incentives.
From the examples given above, it can be seen
that districts and schools now have much
greater incentives to make use of information
that formerly was only passed up to the central
education authorities. For example, many dis-
tricts are seeing that the analysis of these data
can help them to use their resources more effi-
ciently. Now that elected local governments
are making decisions about budget allocations
and schools have a greater say in how they are
managed, there is increasing evidence of both
better planning and greater accountability to
the community. However, the central gov-
ernment still has an important role to play in
advertising examples of good practice and in
providing incentives and technical support to
district governments who wish to try out inno-
vative ideas and who need to develop the ca-
pacity to do so.
Most of the key issues on the subject of
teacher management are the same after decen-
tralization as they were before. The relevant
question is how these issues have been altered
by decentralization and how to create an effec-
tive teaching service within the context of
autonomous district governments and of
school-based management systems. We pro-
pose a new teacher management framework
consisting of three teacher management sub-
systems: teachers’ employment and conditions
of service, teaching performance standards
and performance monitoring, and teachers’
professional development. These are dis-
cussed in the next three sections.
Transparent Employment Processes
and Conditions of Service
Advocates of decentralization contend that the
more that school managers and teachers can
participate in making the decisions that affect
their schools, the more likely it will be that
those decisions will meet the needs of their
Education Sector Review
students. Similarly, if school managers (as
opposed to higher-level education authorities)
can make the decisions regarding the hiring
and firing of teachers in their schools, then
they will be able to build a strong teaching
force. Some of the burning questions being
considered at all levels of government revolve
around who determines the number of teachers
that are required, who determines how much
teachers should be paid and why, and what
elements should comprise their pay. We have
two policy recommendations: (i) establishing
a transparent teacher appointment process
based on efficient deployment norms, school
vacancies, advertisement, selection criteria,
contractual arrangements, and public informa-
tion and (ii) establishing a compensation and
rewards system that is clear, transparent, and
guided by considerations of teachers’ qualifi-
cations, responsibilities, and motivations for
continuous development. Implementing these
policies would require a dramatic shift from a
focus on numbers of schools to numbers of
students and from teachers’ credentials to
classroom practices.
Student-based Teacher Allocation
Formula
Indonesia uses a formula for teacher allocation
and deployment that is based on the number of
schools not on the number of students. As a
result, nationally, average class sizes and the
ratio of students to teachers are both low at all
levels of education, although there are differ-
ences among districts and between schools in
rural areas and those in urban areas. Based on
the total number of teachers in primary
schools (including head teachers, religion
teachers, sports teachers, and class teachers),
the national student/teacher ratio is 22:1 in
public primary schools (sekolah dasar) and
14:1 in religious primary schools (madrasah
ibtidaiyah). These low ratios are not an effi-
cient use of resources, especially when there
are few resources available for other quality
inputs (such as textbooks, library books,
equipment, and in-service training for teach-
ers). However, in public primary schools,
only 68.4 percent of teachers are class teach-
ers. Of the remainder, 12.9 percent are religion
138
Volume 2
teachers and 6.2 percent are sports teachers.
Head teachers, religion teachers, and sports
teachers rarely have a full teaching load, re-
gardless of the size of the school where they
are employed. When the student/teacher ratio
is calculated using class teachers only, the na-
tional ratio is 32:1, which is still reasonably
low compared with countries at a similar level
of economic development.
As in primary schools, the national stu-
dent/teacher ratios for junior secondary
schools are 16:1 in public schools and 10:1 in
madrasahs.51 Junior secondary school teachers
expect to teach only one subject52 and, no mat-
ter how small the school, each school expects
to have at least 18 teachers. The mean en-
rollment size of public junior secondary
schools (SMP) is 358 students, and in reli-
gious junior secondary schools (madrasah
tsanawiyah), 182 students. At the primary
school level, 93.4 percent of teachers are na-
tional civil servants. The remainder are volun-
tary teachers (guru honor) or teachers
employed by the school. Compared with pri-
mary school teachers, only 62 percent of jun-
ior secondary school teachers are permanent
civil servants (who, like primary school teach-
ers, are employed by the district govern-
ments), which means that a much higher share
of these teachers are employed by the schools
or as contract teachers than in primary
schools.
The introduction of decentralization has cre-
ated an opportunity to link teacher manage-
ment to local education priorities. Past
policies on teacher recruitment and deploy-
ment are being revisited as local governments
try to balance their allocations of resources to
the budget for teachers’ salaries and to the
51
The MoRA has pointed out that many teachers in
madrasahs are part-time teachers, and it is not clear
that this estimate is based on full-time teaching
equivalents. The Madrasah Education System As-
sessment (MESA) team is investigating this fur-
ther.
52
Also, in junior secondary schools, there may be
differences in the availability of teachers of differ-
ent subjects.
Chapter 4
budget for other quality inputs to schools. For
many districts, the most difficult questions in-
volved in widening secondary school access
and increasing efficiency at both the primary
and secondary school levels are likely to be
about changing student/ teacher ratios (at the
primary school level particularly) and recruit-
ing secondary school teachers who are quali-
fied to teach more than one subject.
For example, at the primary school level, there
may be a justification for locating schools as
close as possible to where children live. In
many districts, this would result in a large
number of small schools (sekolah kecil), espe-
cially in the eastern islands, Papua, central Ka-
limantan, and other rural districts throughout
Indonesia. This would mean a policy change
in that teachers would have to be recruited on
the basis of a school’s enrollment rate rather
than its number of classes as is presently the
case. Small schools often require teachers
who are trained to teach multi-grade classes
and need to be supported with learning materi-
als that enable students to work in groups.
Therefore, there is likely to be a significant
need for incentive schemes and professional
support services to encourage teachers to ac-
quire the necessary skills for teaching in small
rural schools.
Many existing small junior secondary schools
could also be amalgamated to form more effi-
cient units. If this is to happen, then junior
secondary school teachers will need to be able
to teach more than one subject, which has im-
plications for teacher training and teacher de-
velopment programs.
We recommend that district planners consider
a new formula for calculating teacher re-
quirements. This formula should be based on
the number of students enrolled in a school
rather than the number of classes. In addition,
all teachers (including sports and religion
teachers) should have a full teaching load and
be included in the formula on that basis. Head
teachers, especially in small schools, should
also be class teachers with amounts of non-
teaching time to be calculated on the basis of
the school’s size (that is, the total number of
139
Teacher Management System
students and total number of teachers to man-
age). Planners might consider a sliding scale
so that smaller schools have more generous
student/teacher ratios than larger schools. In
India, each community with 40 children is en-
titled to one teacher per school, and schools
are allowed one extra teacher with every 40
additional children enrolled.53 The principle
behind a sliding scale is that small schools
where multi-grade teaching is the norm should
have fewer students per class (and thus per
teacher) than bigger schools where the teacher
only has to teach one grade level.
Teacher Surplus. Up until the 1990s, the
struggle was to maintain parity between the
supply of teachers and the growing numbers of
schools. At this juncture, however, it is neces-
sary to re-examine the commonly held as-
sumption among policymakers that Indonesia
suffers from a shortage of teachers. We con-
tend that this assumption is false and that gaps
in coverage are due to inefficient teacher dis-
tribution rather than to a teacher shortage.
This apparent teacher shortage is a result of
the allocation formula used to calculate the
number of teachers required in each district.
Indonesia’s annual population growth is 1.6
percent (compared with 1.1 percent in East
Asia and the Pacific as a whole), and the birth
rate is falling. Of course, this does not mean
that there are no gaps in coverage in Indone-
sia, but the gaps in the primary sector are
problems of distribution rather than supply. In
many parts of the country, there are pockets of
teacher shortages alongside pockets of sur-
pluses. In one district in West Java, for exam-
ple, shortages range from an extreme of 173 in
an isolated rural school far from public trans-
53
One proposal put forward in the past in Indone-
sia (Somerset, 1997) laid out a sliding scale based
on school enrollments for calculating the provision
of teachers, which would be more efficient than the
present formula. Small schools with fewer than
130 students would be eligible for one teacher for
every 30 children, larger schools with between 130
and 200 students would be eligible for one teacher
for every 35 children enrolled, and schools with
over 200 students would be eligible for one teacher
for every 40 children enrolled.
Education Sector Review
portation and other services to only 9.4 in a
small school in a peri-urban area near the dis-
trict’s center. This is not uncommon as will
be seen in the discussion below. In the past,
the MoNE assumed that all primary schools
needed one teacher per grade level plus two
additional full-time teachers, one for physical
education and health and one for religion as
well as a non-teaching head teacher. The
MoNE continued to use this formula in its re-
cent recruitment drive for contract teachers.
This formula substantially overestimates the
number of teachers needed in schools, espe-
cially in small schools. For example, in one
school in a district in Java with a stu-
dent/teacher ratio of 9:4, the average class
consists of only 11 children, with 66 pupils
distributed among only six classes (Weston,
2003). This school currently has seven teach-
ers, but according to the MoNE’s teacher for-
mula, the school still “needs” an additional
teacher, which would give it a student/teacher
ratio of 8:3. If the formula is applied to all
schools in the district and all these teachers
were supplied, the student/teacher ratio for
that district would drop to about 13:1, which is
even lower than in the most developed coun-
tries of the world.
With high enrollment rates and an already
plentiful supply of teachers, Indonesia is in a
position to rationalize and upgrade the teach-
ing force at the primary school level. This
would allow districts to channel more of their
resources into quality inputs and to fund the
salaries of the additional teachers that will be
required at the secondary level, which is
where the education system will be expanding
in the future.
Centrally Recruited Teachers. Despite the de-
centralization of education management to the
district level, the MoNE is still funding and
managing the appointment of contract teachers
across the country. The MoNE is testing ap-
plicants, determining who can be employed,
issuing their contracts, and paying their sala-
ries. The MoNE has recruited 190,000 con-
tract teachers in 2003 to be deployed across all
levels of the school system, 20 percent of
whom are to be employed in private schools
140
Volume 2
throughout the country. There was no short-
age of applicants – over 400,000 people ap-
plied. Teachers will be contracted to the
central government for four years and will re-
ceive Rp. 460,000 as monthly base salary from
the central government, with any additional
benefits expected to be funded by the district
governments.
The role of the central government in recruit-
ing teachers has become a sore point for many
districts, especially those that are themselves
in the process of rationalizing schools and re-
examining the formula by which teachers are
appointed to schools (Weston, 2003). These
new teacher appointments have been spread
across districts but are not based on actual
need. Seven districts in Java and Sulawesi
that do not have large shortages of teachers are
all due to receive between 300 and 800 con-
tract teachers, and another district, which can
only be described as having a potential surplus
of teachers, is to receive 399 contract teachers.
Donor-funded education projects are also sup-
porting the salaries of contract teachers. Un-
der project-related agreements between district
governments and donors, contract teachers
hired under these projects are supposed to be
employed by the districts directly while the
donors guarantee their salaries. However, the
central government has by-passed these ar-
rangements by going ahead and recruiting
contract teachers directly and paying them
from the national budget.
The district governments surveyed by Weston
(2003) would like teachers to be selected and
employed at the district or even the school
level, with the central government having no
power to select or employ teachers. This is
compatible with the intention of Indonesia’s
decentralization laws and the purposes of the
general allocation funding to districts. A new
system is needed for selecting, appointing, and
transferring teachers based on student/ teacher
enrollment needs and other criteria related to
the need for multi-grade teaching in small
schools. Also, the rules governing the em-
ployment, deployment, and transfer of teach-
ers need to be sufficiently flexible to allow
Chapter 4
schools to hire teachers from outside their own
districts and for teachers to be able to transfer
to other districts when appropriate.
Performance-based Compensation and
Rewards
Designing teacher salaries and incentive struc-
tures that attract the best and the brightest to
the teaching profession and retain them is a
complex enterprise. In Indonesia, low salaries
are often seen as being an important contribut-
ing factor to poor teacher performance, low
teacher morale, and the low quality of entrants
into the teaching profession, but is this actu-
ally so? Research from Indonesia indicates
that teacher salaries are not low compared
with other professions and international re-
search draws no correlation between teacher
salary increases and improvements in teaching
performance.
We recommend that under decentralization,
teachers’ salary scales should have a national
base and then districts should be allowed to
top up salaries. This topping-up process
would need to be monitored by the central
government to ensure that the DAU alloca-
tions to districts are made sufficiently pro-
poor so poorer districts can afford to add suf-
ficient financial incentives to retain teachers,
especially if many of these are posted to re-
mote schools. Care should be taken not to in-
crease teachers’ base salaries to unsustainable
levels. Where material incentives seem to be a
useful policy tool, it would be better to offer
bonuses to supplement teachers’ remuneration
instead of altering their basic pay scales. Such
bonus systems could also be used to reward
teachers who take on extra responsibilities or
duties, to attract better candidates to the teach-
ing profession, to encourage schools to im-
prove their performance, and/or to attract
teachers to rural locations where there is a
scarcity of applications for vacant teaching
posts. Districts should be responsible for de-
termining appropriate allowances and top-ups
for those teachers who work in remote loca-
tions or under difficult conditions. This should
not be done centrally because, if it were, then
all schools would try to be classified as “diffi-
141
Teacher Management System
cult” so that their teachers would be paid
more. If each district has the power to set top-
up allowances for its own schools in a trans-
parent way, then this would be an efficient
way to attract teachers to rural areas. Brazil
has tried such an approach, and the results are
included in Appendix 4.2 on relevant interna-
tional experience.
Policy decisions about teacher salaries also
need to be informed by research about the
most effective way to spend resources on edu-
cation inputs. Research on education expendi-
ture allocations (Pritchett and Filmer, 1999)
has shown that the marginal benefits per dollar
of inputs that are not associated with teachers’
salaries are commonly 10 to 100 times higher
than those of direct inputs to teachers’ welfare
(that is, their salaries and incentives). This
implies that too much is generally spent on in-
puts that provide direct benefits to educators
(like teachers’ wages) relative to the amount
spent on other inputs that contribute directly to
learning such as books or instructional materi-
als.
Recent research shows that most Indonesian
primary school teachers and junior secondary
school teachers have earnings equivalent to or
higher than those of other workers with an
equivalent level of education. Teachers with a
university degree (that is, mostly those who
teach in senior secondary schools) may earn
slightly less than other workers with an
equivalent level of education. However,
teachers earn more per hour than most other
workers and have many more days off per
year.
An analysis of labor force data from 2000
(Filmer, 2002) indicated that teachers with
qualifications below the diploma level (about
one-third of teachers) have monthly earnings
that are, on average, 22 percent higher than the
monthly earnings of other paid workers with
the same qualifications. The differential (in
terms of monthly salary) is smaller among
those with a first or second level diploma and
then becomes negative; in other words, the 10
percent of teachers with a third level diploma
and the 24 percent with a university degree
Education Sector Review
earn 18 and 37 percent less respectively than
other paid workers with the same levels of
education.
Hourly earnings follow a different profile
since teachers tend to work fewer hours but
are typically paid more per hour than other
workers. Teachers consistently work fewer
hours than other workers, regardless of their
level of education. Teachers in the study re-
ported working about 34 hours per week while
other paid workers with similar levels of edu-
cation reported working between 43 and 46
hours per week (see Table 4.2). Not only do
teachers work a shorter week than other paid
workers, but they also have more holidays per
year. Thus, teachers with senior secondary
The above-mentioned labor force study also
noted regional differences in teachers’ earn-
ings. For example, in West Sumatra, the study
found that teachers earn 7.3 percent less per
month than teachers in West Java (controlling
for age, gender, urban residence, and educa-
tional attainment). Other workers in West Su-
matra, however, earn 32.3 percent more than
workers in West Java do. Other places where
the differentials are large are Riau (20.7 per-
cent), South Sumatra (19.3 percent), DKI Ja-
karta (28.2 percent), and Central and South
Kalimantan (24.3 and 35.3 percent). These
are provinces where teachers earn substan-
tially less than other workers. The same
places have large differentials in terms of
hourly earnings as well. Conversely, there are
two provinces where teachers earn substan-
tially more per month than other workers –
NTB (35.7 percent) and Central Sulawesi
(16.3 percent). In the case of hourly earnings,
two additional provinces make the list –
Yogyakarta (20.9 percent) and West Kaliman-
tan (20.6 percent).
Indonesian primary teachers have salaries that
are comparable to those paid to other workers
but are lower than the salaries paid to teachers
in other countries. However, this is partially
offset by the fact that they have smaller
classes, although they may work longer hours
than teachers in other East Asian countries
(OECD, 2002). However, studies by the
142
Volume 2
schooling earn 61 percent more per hour,
teachers with first and second level diplomas
earn 32 percent more, and those with third
level diplomas earn 5 percent more than other
workers with the same levels of schooling.
However, among workers with a university
degree, teachers earn 19 percent less than oth-
ers.
Hence, after controlling for individual charac-
teristics and the respondents’ region of resi-
dence, the study found that teachers earn 7.9
percent less per month than other paid work-
ers, but at the same time they earn 18.9 per-
cent more per hour than other workers. See
Table 4.2 for a comparison of the hours
worked by different types of teachers.
Balitbang of time spent on instructional tasks
indicate that teachers may spend only about
half of their time in school actually teaching.
Table 4.2 Average Number of Hours Worked per
Week
Not a Teacher
Teacher
All workers (SAKERNAS 34.0 (8.5)
2000) 44.7 (13.1)
Public school teachers (IFLS
2000)
Primary schools -- 33.6 (7.4)
Junior secondary schools -- 24.1 (7.9)
Private school teachers (IFLS
2000)
Primary schools -- 29.6 (10.3)
Junior secondary schools -- 21.8 (9.8)
Source: Filmer, 2002.
Notes: Data derived from SAKERNAS 2000 and from the
Indonesia Family Life Survey (IFLS) 2000.
To compensate for this, managers need to be
concerned about teachers’ productivity, and
teachers need to be aware of the statutory
numbers of hours of instruction and school
days in a year that they are obligated to work.
School managers should be able to hold
schools and teachers accountable for their
productivity. For example, it is common in
many secondary schools for students to attend
Chapter 4
school only part-time in the last three weeks of
the term and to spend the rest of that time on
“home study” to prepare for the end-of-term
tests. After taking the test, the students might
not be required to attend school for up to one
week while their teachers mark their test pa-
pers. In return, school managers should be
able to ensure that teachers are deployed effi-
ciently so that no teacher is burdened with
very large classes while others have small
classes. District governments (and supporting
institutions at the national level) need to con-
sider these points as they try to balance their
expenditures on salaries with their expendi-
tures on other valuable and complementary
inputs to schools.
The research findings reported in this section
raise questions about the relationship between
teachers’ productivity and earnings. If the
number of applicants for vacancies is anything
to go by, the recent national recruiting exer-
cise for contract teachers had a ratio of two
applicants per vacancy, which seems to indi-
cate that teachers’ salaries are not a deterrent
to applicants.
The Impact of Corrupt Practices on
Teachers and Teaching
What Indonesian teachers earn and what
wages the teachers actually receive are not al-
ways the same. The ESR focus groups in
2003 found that teachers face high transaction
costs in the form of bribes during the process
of, for example, being employed, transferred,
promoted, or selected for in-service training.
A recent small survey of 70 schools with 130
teachers in eight provinces (Keluarga Sekolah
Indonesia, 2003) indicated that 80 percent of
teachers do not receive the full amount of their
pay and that 30 percent or more of their pay is
unofficially deducted by the education office
or by their school principals beforehand.
In some cases, teachers seeking to be pro-
moted to a head teacher position have had to
pay the equivalent of six to twelve months of
their salary to the education officials responsi-
ble for appointments in order to win the post.
Many teachers use their savings or borrow this
143
Teacher Management System
money against their future earnings. The in-
centive to meet these payments is, of course,
the increased salary and benefits of the promo-
tion, but it also has to do with the increased
opportunity to generate additional income
from, for example, fees for after-school tuition
and examinations and commissions on the sale
of textbooks and school uniforms. Any study
of teachers’ earnings and salaries should take
into account the high cost to teachers (and to
the credibility of the whole education system)
of these kinds of “fees” and other rent-seeking
activities.
Transparent teacher management systems
need to be put in place, and mechanisms must
be developed to address grievances. Indonesia
is not alone in recognizing the damage done to
the education system by poor teacher man-
agement practices. Issues of transparency (in-
formation, accountability, and incentives) and
what rights teachers have to receive redress for
their grievances about poor teacher manage-
ment processes are being faced by a number of
countries. At the UNESCO International
Institute of Education Planning in Paris in
2002, meetings were held on the subject of
corruption in education in which several
countries admitted to having this problem.
For example, in Mexico, the high cost to
society of corruption was estimated to be
around 15 percent of GNP. In Ghana and
Nigeria, corruption abounds in school admis-
sions, the payment of teachers’ salaries, and
the leak of examination questions to students.
In South Africa and Pakistan, public resources
were being diverted to fictitious schools,
teachers, and pupils as a result of poor data
monitoring and mis-reporting.
Hong Kong has been addressing corruption in
society in general. It established an anti-
corruption commission in 1973, which has a
sub-committee on education that deals, in par-
ticular with inappropriate allocations of funds
and with teachers’ inadequate professional
practices. Table 4.3 summarizes some of the
main ways in which corrupt practices in
teacher management affect quality, equity, and
ethical standards in the education sector.
Education Sector Review Volume 2

Table 4.3 The Impact of Corrupt Practices within the Education Sector
Corrupt practices/ opportuni- Elements of education systems
Area of management involved ties for corrupt practices most affected
Recruitment, promotion, and ap- x Irregular recruitment and Quality
pointment of teachers (including unjustified allocations
systems of incentives) x Unjustified promotions
x Training and scholarship
allocation by criteria
based on passing
x Payment of salaries and
allocations to ghost teach-
ers
x Ignoring posting and
transfer criteria for teach-
ers
(arising from favoritism, nepo-
tism, bribes and pay-offs,
by-passing criteria)
Conduct of teachers x Teaching hours paid for as Access
opposed to the number Quality
really delivered Equity
x Ghost teachers Ethics
x Bribes and pay-offs (for
school entrance, for the
assessment of children,
etc)
x Use of fees requested from
pupils
Allocation of specific allowances x Favoritism Access
(compensatory measures, fellow- x Nepotism Equity
ships, subsidies to the private sec- x Bribes and pay-offs
tor etc) x By-passing criteria
Examinations and diplomas x Selling information Equity
x Favoritism Ethics
x Nepotism
x Bribes and pay-offs
x Academic fraud
Supply and distribution of equip- x Closed processes in public Equity
ment, food, and textbooks tendering
x Embezzlement
x By-passing criteria
Building of schools x Closed processes in public Access
tendering Equity
x Embezzlement
x School mapping
Source: Hallak and Poisson, 2002 (adapted).

144
Chapter 4 Teacher Management System

Box 4.2 Permanent or Contract Teachers?

Ibu Guru [the teacher’s real name has been changed] has been a primary school teacher for nine years. She
trained as a religion teacher. She was locally hired and is employed and paid directly by the school. Her
monthly pay is Rp. 100,000 and she teaches grade 1. She uses up-to-date pedagogic approaches and
achieves excellent results with her students. Her outstanding performance as a teacher came to the atten-
tion of education managers, and she was recruited to train teachers in other districts and provinces.

Most madrasahs and many primary and junior secondary schools rely on locally hired teachers who may be
paid in the range of Rp. 50,000– Rp. 125, 000 per month compared to the Rp. 500,000 and more per month
paid to teachers who are civil servants.

District managers (from 30 districts in 10 provinces) have acknowledged their reliance on locally hired
teachers and on the professionalism of many of these teachers. However, they have pointed out that, when
these teachers become members of the civil service, their performance often deteriorates.

The managers expressed the view that hiring new teachers on limited-term contracts would place them on a
similar basis to many private sector employees. Under-performing teachers could be more easily made re-
dundant – good teachers need never fear redundancy. It would also mean that teachers could be placed in
schools as and when they are needed and the level of their wages tied to working in a particular school.

Source: Weston, 2003.

Teacher Motivation and Incentives We recommend the creation of a teaching ser-

What motivates teachers to enter and remain
in the profession is not solely related to their
salary levels. Other aspects of professional
life matter as well, including recognition from
the local community and from their peers, op-
portunities to share their experiences and to
learn from others, access to continuous profes-
sional development, and pride in their stu-
dents’ achievements (see Box 4.2 below).
De-linking Teachers from the Civil
Service
The majority of school teachers are civil ser-
vants. However, a civil service exists to con-
trol and operate a bureaucracy, and it can be
argued that school teaching is not a bureau-
cratic activity. The teachers’ unions and other
professional associations are already discuss-
ing how best to establish a separate teaching
service. The benefits of having such a service
would be that it would better meet the profes-
sional needs of teachers by developing spe-
cific criteria for teachers’ professional career
development and reward systems rather than
using administrative criteria as happens now.
vice that links the licensing of teachers, their
professional rights and obligations, their con-
ditions of employment, and their career incen-
tives and promotional paths to the needs of
schools and classrooms. Under the new sys-
tem, teachers’ unions and associations would
protect teachers’ rights and thus empower the
members of this hitherto powerless profession.
It is important to preserve a flexible teaching
force and a national teacher labor market as
much as possible. This would require putting
mechanisms in place to allow teachers to ap-
ply for vacancies in any district and for
schools to have a say in the selection of their
teachers. Districts need to be able to meet
supply and demand in more flexible ways than
is currently possible. The functioning of the
teacher labor market may well need a certain
degree of central direction and management
(in the form of standards and licensing) to en-
sure that it stays national, but the responsibil-
ity for allocating teachers to vacant posts in
schools can be decentralized. This would be
the best of both worlds. There should be a na-
tional pay scale or salary grading system based
on pre-set minimum pay levels, with districts
and schools having the option, as discussed

145
Education Sector Review
above, to provide their teachers with supple-
mentary benefits and allowances according to
criteria determined at the district or school
level. The minimum pay scales and condi-
tions of service should emerge from a collec-
tive bargaining process between the national
government and teachers’ unions and profes-
sional associations. Through such a process, a
better balance could be struck between na-
tional and district priorities and the needs of
teachers than is currently the case.
The Indonesian Teachers’ Association (Per-
satuan Guru Republik Indonesia or PGRI)
represents the vast majority of teachers in In-
donesia (1.4 million) and is naturally protec-
tive of its members. Since decentralization, it
is learning (with the support of the ILO) to act
in the interests of its members. The national
teachers’ association now has greater freedom
to act as a labor union with collective bargain-
ing rights. Most teachers would probably re-
gard salary increases as a higher priority than
other professional issues such as performance
monitoring or access to in-service training.
The PGRI was founded on November 25,
1945 and for several decades was a New Or-
der organization representing teachers as civil
servants and Golkar party members rather than
a trade union. Newly founded independent
teachers’ unions cannot compete in size or
match the PGRI’s infrastructure, which it
holds from its pre-trade union existence (for
example, 17 out of 29 PGRI provincial com-
mittees have their own buildings and many
have teacher training institutes). The demand
for increases in salaries comes mainly from
teachers who, with the advent of local democ-
racy and their newly unionized teachers’ asso-
ciation, are an increasingly powerful lobby.
However, teachers and their unions are self-
interested and are not always able to see the
public interest of the nation and to accept the
most efficient use of resources. Teachers tend
to assume that the two are the same thing, but
they are not.
146
Volume 2
School-oriented Performance Standards
and Monitoring
When schools perform well, it is due to a
combination of effective teaching and of
strong professional leadership by the school
principal. Under decentralization, school
committees and district governments expect to
hold schools and teachers accountable for
learning outcomes, but the way in which
school performance is currently measured is
not always based on the most value-added in-
puts, as became clear from the focus group
discussions discussed above.
Teaching is a complex operation. As summa-
rized by Brophy and Everston (1976), effec-
tive teaching requires the ability to implement
a very large number of diagnostic, instruc-
tional, managerial, and therapeutic skills, with
teachers having to tailor their behavior in spe-
cific situations to the needs of the moment
while still performing effectively in the class-
room. Indonesia’s current standards for
evaluating teachers rely heavily on their cre-
dentials and years of experience, even though
research has demonstrated that having a more
educated and experienced teacher does not
necessarily lead students to learn more or bet-
ter (Woessmann, 2001). However, research
has also shown that what teachers know and
are able to do does improve the academic per-
formance of their students. For example, re-
searchers in the U.S. have found that the
greater a teacher’s cognitive skills as demon-
strated in a standardized test, the better his or
her students perform academically (Summers
and Wolfe, 1977; Strauss and Sawyer, 1986;
and Ferguson, 1990). Thus, rewarding teach-
ers for what they actually know and do in the
classroom is likely to have a much greater im-
pact on student performance than rewarding
them for their academic credentials and years
of experience (see also Darling-Hammond,
1997).
Chapter 4 Teacher Management System

Box 4.3 The Importance of Teacher Quality

A review of the literature indicates that a range of factors relating to teacher quality affects stu-
dent performance (see OECD, 2002). However, the literature also reveals the limitations of the
information provided by the more measurable characteristics of teachers. Researchers have often
found it hard to isolate the effect of characteristics such as knowledge of subject-matter,
qualifications, academic ability, pedagogical knowledge, or teaching experience on student
outcomes. The evidence predominantly shows that all of these teacher characteristics have a
positive impact on student learning but to a lesser extent than might have been expected. One
possible explanation is that research studies looking at individual school systems with relatively
uniform teacher characteristics have not been able to observe sufficient variation in such factors
to be able to measure the difference that they make. In addition, for most of these characteristics,
a “threshold effect” is likely to apply; teachers need a certain level of qualifications or experience
to be effective, but further attainments beyond those levels may have progressively less of an
impact on student performance.

A further possible explanation is that the teacher characteristics that are typically measured in re-
search studies may explain less of the variation in teacher quality than other characteristics that
are more difficult to measure. Such characteristics may include the ability to convey ideas in clear
and convincing ways, to work effectively with colleagues and the school community, to use a
wide range of teaching strategies appropriate for students’ needs, and enthusiasm, creativity, and
commitment to the students’ success. The literature reviewed in OECD (2001) includes recent
studies that point to the importance of such variables in influencing student learning. This sug-
gests that policymakers need to take account of the potentially substantial variation in quality that
exists among teachers whose easily measured characteristics are similar.

Source: OECD, 2002.

We recommend that Indonesia should establish a
process for evaluating school performance that is
based on individual teacher performance reviews
that assess their value added to education proc-
esses and outcomes.
Furthermore, we recommend that those who
define the criteria for effective teaching in Indone-
sia (currently the MoNE) should more widely re-
present the key stakeholders in education. These
recommendations are based on our assessment that
current standards and performance assessment
practices have failed to improve the quality of tea-
ching in Indonesian schools. International best
practices provide strong support for this recom-
mendation as will be seen in Box 4.4.
The definition of effective teaching in the di-
verse environments of Indonesia’s schools is
still far from clear in the context of the new
decentralized education system. Designing
monitoring tools and training inspectors in
how to assess the many aspects of teaching in
classrooms also remains to be accomplished.
Also, the teacher competencies and the school
performance measures that are currently being
developed are too centrist in their approach.
The OECD has analyzed what teacher charac-
teristics have the greatest effect on improving
quality (see Box 4.3), and this analysis pro-
vides a good example of meaningful teacher
performance standards for a decentralized
education system. However, Indonesia has
begun to develop a career-long set of compe-
tency standards for teachers and ways to
measure their performance against these stan-
dards. Research from elsewhere in the world
has indicated which teacher characteristics and
behavior contribute the most to improving the
academic performance of students. An analy-
sis of junior secondary school results from the
Third International Mathematics Survey
(Woessman, 2001) gave some illustrations of
teacher characteristics and behavior at the
school level that seem to improve students’

147
 Education Sector Review Volume 2

Box 4.4 International Evidence on Schooling, Resources,

Educational Institutions and Student Performance

x Students of female teachers score higher than students of male teachers in both mathematics and sci-
ence.
x School autonomy in the purchase of supplies is associated with good academic performance by stu-
dents.
x Students in schools that were responsible for hiring their own teachers performed significantly better
in mathematics and science; thus school autonomy in personnel management seems highly conducive
to good student performance.
x When individual teachers can choose which teaching method to use on the basis of what they think
would be best for their students, this helps students to learn more. Positive effects on students’ test
scores were also observed when individual teachers could influence how the curriculum was taught
in the school and when teachers were responsible for the purchase of supplies.
x The longer the instruction time that students have in school, the better their academic performance.
x Centralized examinations (that is, tests and examinations set independently of the school) that make
students’ learning efforts more visible to external observers were shown to have a positive impact on
students’ educational achievement.
x The more time that class teachers spend outside the formal school day on preparing or grading their
students’ work, the higher their students’ test scores in mathematics.
x It seems that assigning homework less often but on a more ambitious scale is particularly conducive
to students’ learning.

Source: Woessmann, 2001.

performance (see Box 4.4). These characteristics
are a good place to start in devising ways to meas-
ure how teachers perform in terms of meeting
teaching and learning standards.
The international literature provides several promis-
ing models for setting standards and monitoring
teacher performance. The best known of these, the
UK school inspection system (Ofsted, 2003), is
described in Appendix 4.2. Recently, Chile has been
developing new models for evaluating teacher per-
formance, although these have been complicated by
long negotiations between the municipalities that
employ teachers and the teachers’ unions that exist
to protect the interests of teachers. In Indonesia,
the processes of democracy are still being devel-
oped, and much of the standard-setting of the re-
cent past has been centrist and from the top
down. Education stakeholders at the local level
have not yet had much opportunity to discuss,
adapt, or reject the standards and performance
monitoring guidelines that are being developed.
A study (Avalos, 1998) reviewed the battle for
and against the performance evaluation of mu-
nicipal teachers in Chile. (A summary of the dif-
ference between the proposed evaluation system
as it was set out in the government statutes and
the final negotiated system is in Table 4.4.)

148
Chapter 4 Teacher Management System

Table 4.4 Comparing Two Teacher Performance Evaluation Systems in Chile

Evaluation System The Statute System The New Agreed System
Purpose To assess teacher’s “functionary” or contractual Teaching performance, not contractual obliga-
performance. tions
Who is to be evalu- All teachers who have been employed for at least Gradually to cover all teachers in municipal
ated six months schools with one or more years of service, over a
period of four years.
Frequency of evalua- Once a year Every four years
tion
Content of the evalua- x Professional and contractual responsibility Specified in the National Set of Criteria: Frame-
tion x In-service courses taken and evidence of work for Good Teaching.
self-improvement (research or publica- It covers four domains:
tions) x Preparation for teaching
x Performance indicators including student x Developing an appropriate classroom envi-
results according to contexts ronment
x Exceptional evidence such as design of x Classroom teaching
school or classroom improvement projects. x Professional responsibilities beyond the
classroom
Each domain has four or five standards or crite-
ria to guide the assessment.
Procedures Ratings in a “evaluation record” and evidence x Portfolio with evidence of teaching and as-
from the teacher’s “life-history record.” sessment materials (may include a video)
x Self-evaluation sheet
x Structured interviews
x Head teacher report form
Rating scheme A point-scheme from 1 (deficient) to 5 (excel- Four categories based on ratings from examined
lent) evidence: outstanding, competent, basic, and un-
satisfactory.
Who evaluates A committee composed of the school head or Experienced teachers who are specifically
municipal head, a teachers’ representative, and a trained and checked for inter-rater reliability
municipal representative
Who decides The above committee A municipal evaluation committee on the basis
of the evaluators’ reports.
Right of appeal A committee including the municipal Mayor, the Not specified
Head of the Municipal Education Corporation,
and a school representative.
Effects Teachers deemed “unsatisfactory” in two con- Teachers deemed “basic” or “unsatisfactory”
secutive evaluations may be dismissed. Highly will be offered support to improve and will be
rated teachers may be eligible for in-service assessed up to twice more before being dis-
courses and funding of innovation projects. missed. Highly rated teachers will be offered ex-
tra opportunities for professional growth.
Coordination of the Municipalities x A national system under the Ministry of
system Education.
x A three-party technical committee: the
teachers’ union, municipalities, and aca-
demic institutions.
Funding Municipal budgets A national fund equivalent to 1% of teacher sala-
ries to pay for in-service provision organized by
municipalities.
Source: Avalos, 1998.

There are lessons from Chile that Indonesia
might want to consider. Avalos (1998) points
out that the most important difference between
the two systems lies in the fact that the new
system has a well-developed set of criteria or
standards against which to compare teaching
behavior, which the statutory system did not
have. These standards can also form the core
competencies for a career-long professional
development system.
Career-Long Professional Development
There have been a large number of teacher
education and training projects in Indonesia
over the past 30 years (Sweeting, 2001).
These have aimed at revising the curriculum in
pre-service education programs, upgrading the
technical capacities of teacher educators and
teacher education institutions, and developing
in-service training and professional support
systems based on concepts of school cluster-
ing and teacher mentoring. However, there are
still many complaints about the fact that most

149
Education Sector Review
in-service training does not improve teacher
quality, which reinforces the public’s opinion
that the quality of most teachers in Indonesia
is low (Sweeting, 2000).
We recommend a new paradigm for teacher
training in Indonesia, one that takes as its
starting point the career-long professional de-
velopment of teachers. This would cover
teachers’ initial training, their induction into
school life, their professional registration, and
their continuing professional development.
This continuum of professional development
needs to be linked directly to the actual class-
rooms and schools in which teachers work.
This means that colleges and universities need
to be much more responsive to the demands of
schools and of the district governments that
employ teachers. They also need to be respon-
sive to the professional demands of teachers
who wish to deepen their experience and
knowledge of teaching to add value to what
they do in classrooms and in collegial activi-
ties with their colleagues (for example, men-
toring newly licensed teachers). The notion of
teacher preparation is now being redefined to
include reflective teaching approaches and
classroom-based action research collaboration
among teachers, effective communication, and
other characteristics that contribute to lifelong
professional development (see Appendix 4.1
for a fuller version of what teachers should
know and be able to do).
While there is constant discussion about re-
quiring higher levels of certification for teach-
ers, there are issues that need to be addressed
beforehand about the kind of teachers that
schools need and the relationship between
formal qualifications like the DII or S1 and the
actual lives of teachers. These issues include
how to organize learning in multi-grade
schools, what are the most appropriate meth-
ods for teaching literacy to young learners,
and how to approach teaching in multilingual
environments. There also needs to be more
discussion about whether or not resources
spent on constantly upgrading teachers’ quali-
fications will actually improve their perform-
150
Volume 2
ance in the classroom or add value to their
students’ learning.
Initial Preparation of Teachers
The minimum qualification for primary teach-
ers was set in 1989 as a two-year post-
secondary-school teaching diploma (DII). Yet
in 2002, only one-half of all primary school
teachers in Indonesia held this certificate or a
higher qualification. For junior secondary
schools, the minimum teaching qualification is
a three-year education degree (S1), and in
2002, only 50.7 percent of teachers held this
or a higher qualification. Research consis-
tently indicates that the most successful
teacher education programs require trainee
teachers to spend a high proportion of their
time in teaching and other practical and intern-
ship experiences in schools (see Box 4.5 be-
low).
International research indicates that:
x The most competent teachers are
those who have a good mastery of
the subject to be taught and have
also studied Education.
x Teachers with more training in
teaching methodology are more ef-
fective than those with less.
x Teachers who have spent more
time studying pedagogy are better
teachers, especially when it comes
to encouraging higher-order think-
ing skills in their students and ca-
tering for their individual needs.
x How well trainee teachers perform
in well-assessed practice teaching
is the best predictor of their future
success in the classroom.
The main implication of these findings for ini-
tial teacher preparation and for continuing pro-
fessional development programs is that
training institutions will need to send trainee
teachers to practice in schools in a wide range
of different environments.
Chapter 4 Teacher Management System

Box 4.5 Teacher Education Programs that Made a Difference

Research on teacher education programs in the USA has shown that the most effective programs have these
characteristics:

x A common vision is expressed in the coursework and in the clinical experiences or practice teaching
sessions.
x They set well-defined standards of practice and performance.
x Graduates are expected to know content-specific pedagogy, child development, learning theory, and
student assessment methods.
x They provide extended clinical experiences (lasting a total of 30 weeks in a four-year degree pro-
gram).
x They have strong partnerships with universities and schools.
x They make extensive use of case methods, teacher research, performance assessments, and portfolio
evaluations.

Source: Darling-Hammond, 2000.

censing boards with responsibility for initial

Induction of New Teachers into School
Life and Classroom Teaching
There is currently no formal school induction
process for newly graduated teachers even
though this is an important stage in their pro-
fessional development. Most professions have
internship systems that lead to registration and
entry into the profession. It provides an impor-
tant link between the employer, the service
provider, and those who educate and train pro-
fessionals. An induction process also provides
a supportive environment for new teachers
when they are first being held fully account-
able for a class of children and their learning
to parents and colleagues. Looking at the
OECD’s extended list of what teachers should
know and be able to do (see Appendix 4.1), it
is obvious that no new graduate could possibly
have all of these characteristics at the start of
his or her career. The Directorate of Higher
Education at the MoNE is currently identify-
ing what new graduates are expected to know
and be able to do and what beginning teachers
should know and be able to do in order to be
licensed.
Introducing an induction stage into teacher
development in Indonesia would require estab-
lishing an internship system that links poten-
tial employers, schools, and licensing boards,
developing mentoring systems for interns,
providing incentives for employers and
schools to support interns, and establishing li-
teacher licensing and for performance moni-
toring at the renewal stages. In Ireland, for ex-
ample, a Department of Education Inspector
assesses each new teacher for certification
purposes during an initial probationary period
following his or her appointment to a full-time
teaching post. Most new teachers complete
the certification requirements within two and a
half years of their graduation. Malaysia and
Australia also have systems that require teach-
ers to register after completing their initial
teacher education programs (Acedo, 1998).
A major unsolved problem in teacher licensing
in Indonesia is that no criteria exist for deter-
mining when a prospective teacher is fully
ready to take responsibility for teaching a
classroom full of students. In most countries,
teachers simply have to pass all of the courses
in an approved teacher education program.
However, because Indonesian policymakers
did not believe that this route necessarily
demonstrated that prospective teachers were
fit to practice, they imposed additional tests of
basic skills, subject matter, and pedagogy on
trainee teachers.
The Indonesian system consists of paper and
pencil tests with mainly multiple choice ques-
tions in standardized tests of basic skills, sub-
ject matter, and pedagogical knowledge as
well as classroom observation sessions in
which candidate teachers are assessed against

151
Education Sector Review
a checklist of designated kinds of teaching be-
havior. Neither the standardized tests nor the
observations based on the checklist adequately
reflect the extent of a candidate’s knowledge
base and, thus, improve the quality of candi-
dates’ preparation for teaching. Similar tests in
the USA were abandoned in the mid-1980s in
favor of performance-oriented assessments
because of the following problems:
x Only 10 percent of the questions
actually asked about the candi-
dates’ knowledge about teaching
and learning.
x Over 40 percent of the questions
were so poorly specified that they
either had no clearly defensible
right answer or had an answer
based solely on ideology rather
than on knowledge of research
(Darling-Hammond, 1986).
x The tests did not allow candidates
to demonstrate their knowledge,
judgment, and skills in the kinds
of complex settings that character-
ize real teaching.
x They represented a narrow behav-
ioristic view of teaching that over-
simplifies the nature of teachers’
decision making.
x The exceedingly brief statements
of professional problems failed to
represent the complexity of teach-
ers’ decision making processes or
the full range of their professional
knowledge base.
x The questions failed to provide
sufficient information about the
context for and goals of teaching
decisions to allow candidates to
give sensible answers.
We recommend that Indonesia develop per-
formance-oriented assessments for teachers
grounded in four assumptions about teaching
and learning:
152
Volume 2
x Teaching is a function of both
content and pedagogical knowl-
edge.
x Combining support and assess-
ment is essential to the evaluation
of teachers’ professional compe-
tence.
x The tasks in the assessment must
represent authentic exhibitions of
teacher-related activities.
x Professional judgment and exper-
tise are key dimensions in assess-
ing teacher performance
(Pecheone and Carey, 1990).
Continuous Professional Development
In many areas of Indonesia, teachers act as
mentors to other less experienced teachers ei-
ther in professional development activities at
the school or through teachers’ meetings at the
school cluster level or in district in-service
training workshops. However, reports indicate
that in many cases this system breaks down
because mentoring does not provide the men-
tors with any opportunity to deepen their pro-
fessional experience nor are the resources
available for them to do so (Nielsen 1996).
The main sources of funding for professional
development activities in the past have been
externally funded projects or the central gov-
ernment’s project funding. When these
sources are not available, there are only lim-
ited resources available to pay for any school-
based professional development activities. To
date, few district governments have allocated
any budgetary resources to in-service training
activities. Some teacher training institutions
and universities, again with project funding,
have established applied research activities in
schools in which teachers have been able to
participate, and reflect on their practice, and
develop ideas for improving teaching prac-
tices at their schools. Some schools have used
project money to pay for experts to work with
them on specific teaching and learning issues,
but these examples are not common.
Chapter 4 Teacher Management System

Box 4.6 Mexico’s Incentive Scheme for Teacher Development

Mexico’s Carrera Magisterial (CM) Program, first implemented in 1994, ties teachers’ compensation to their
professional development. Teachers who voluntarily join the program agree to participate in annual perform-
ance evaluations and to have their annual salary increases linked to the results of these evaluations. These per-
formance evaluations consist of the following components: teacher performance evaluations (composed of a
combination of self-assessments and peer reviews); an annual written examination of the teacher’s professional
skills; written student examinations; educational attainment; the completion of accredited courses to update
skills; and years of teaching experience.

Although the program is voluntary, the number of teachers enrolled since 1994 has increased substantially, be-
ginning with 38 percent of the total number of teachers and rising to 49 percent after just two years. Indeed,
the proportion of students whose teachers were enrolled in the program more than doubled during that period,
reaching around 25 percent of all students. In addition, in 1997, the percentage of all teaching positions that
were filled by teachers who were participating in the CM program was close to 50 percent. A recent study
found that students whose teachers are in the CM program have higher average test scores than students whose
teachers are not in the program. Thus, after 10 years, the CM program has already had a considerable impact
on the Mexican education system.

Source: Lopez-Acevedo, 2001.

The existing credit point system that is used to
assess whether teachers are ready for promo-
tion needs to be revamped to create more in-
centives for teachers to upgrade their skills
and update their knowledge on a regular basis.
Also, universities and other education institu-
tions need to be more responsive to teachers’
professional needs by providing them with
short vacation courses and flexible modular
courses that would allow them to deepen their
knowledge and widen their experience without
necessarily committing themselves to long-
term, full-time academic programs. Teachers’
professional development programs should be
linked to school and teacher performance
monitoring. There is much work to be done in
this area, but there is also a lot of Indonesian
experience to build on. Also, other countries,
such as Mexico (see Box 4.6 below), have also
been experimenting with tying teachers’ com-
pensation to their professional development
and providing teachers with professional su-
port. This professional support can consist of
peer mentoring within schools, opportunities
to work alongside experienced teachers in
their own or other schools, visits to other good
practice schools and classrooms, or bringing a
teacher-designated “expert” to the classroom
to encourage teachers to reflect on their teach-
ing behavior and to try new approaches.
Using Teacher Management Systems to
Achieve Education Goals
Educators in Indonesia probably already feel
that there is a need for a new paradigm for the
development of the teaching profession. Many
elements of this new approach are in place or
are being tried out in a number of project-
related activities. However, developing an
overall framework that incorporates these ac-
tivities into a lifelong perspective on teachers’
professional development should be a priority.
Having effective teacher management systems
in place in every school is essential for achiev-
ing Indonesia’s national education goals. The
policy framework that we are proposing aims
to improve schools by creating a professional
teaching service with the following character-
istics: merit-based appointments, transfers,
and promotions; school-based performance
evaluations; and career-long professional de-
velopment. These characteristics mirror three
longer-term policy goals: (i) creating a teach-
ing service in which the professional life of
teachers is central to the management system
and in which schools select their own teachers
in a transparent way; (ii) linking the monitor-
ing of schools and teachers by adding per-
formance reviews as part of teachers’ career
development; and (iii) developing the various

153
Education Sector Review Volume 2

phases of teachers’ professional development their teachers’ performance, which would be

including initial preparation, induction into the
teaching profession, school life, and continu-
ous professional development.
These policy tools are based on some assump-
tions about how schools would benefit. For
example, under a school-based management
system that involves the local community in
making decisions about how the school is
managed, the school should have the right to
choose its teachers. This would result in im-
plicit contractual agreements between the
school that selected the teacher and the teacher
who selected the school. Schools and districts
would have specific expectations regarding
evaluated in terms of the value that the teacher
adds to student learning in the classroom, to
the professional life of the school, and to the
wider educational community. These attrib-
utes would be the basis of any recognition,
promotion, or rewards given to the teacher as
well as of the renewal of their contracts and of
the provision of assistance in improving their
classroom performance. Teachers at the start
of their careers would be expected to exhibit
these attributes in order to be hired. In return,
the school would have an obligation to provide
the teacher with professional development op-
portunities.

Table 4.5 Potential Policy Tools for Managing the Teaching Workforce
Demand-side tools Supply-side tools Matching process tools
Class size Attractiveness of the profession Bargaining mechanisms
Monetary incentives Set of mechanisms for bargain-
Teaching loads -relative salaries ing: setting of salaries, pay differ-
-career structure and salary scale entiation to account for shortages,
Required learning time for stu- -other (e.g. merit-based awards, opening of profession to interna-
dents signing bonuses, differentiated tional markets.
pay, housing subsidies, childcare,
Use of teaching assistants and income tax credits) Level of centralization of bar-
other support staff gaining
Non-monetary incentives Degree of autonomy of schools
Use of technology and distance -vacation time, flexibility to take regarding recruitment, selection
learning leave and assignment of teachers; and
-working conditions: opportuni- setting of incentive structure.
Structure of curriculum and edu- ties for collaboration and decision
cational programmers making, school safety and student Recruitment and selection
discipline, class size, working processes
Starting and ending age of com- loads, quality of facilities and in- Organization; definition of quali-
pulsory education structional materials fication requirements; delegation
of authority to recruit; select and
Academic standards defining re- Teacher education and certifi- assign teachers; methods for
quirements for graduation cation screening candidates; emergency
Teacher initial education and pro- recruitment programs.
fessional development: supply,
structure, content, and accredita-
tion of teacher education pro-
grams; incentives to engage in
teacher education; induction and
mentoring programs; provision of
professional development activi-
ties.

Certification of teachers: defini-

tion of certification standards; al-
ternative certification programs.

Source: OECD, 2002.

154
Chapter 4
The most critical point in our proposals is the
establishment of a separate teaching service.
This would need to be built up over time. It is
also essential to examine how teacher salaries
depend upon districts’ budgets and how this
affects the degree to which schools can recruit
teachers. To illustrate what might be involved
155
Teacher Management System
in putting in place such a teacher management
framework, we have given some examples in
the matrix below of appropriate policies to
adopt, the kind of actions required to imple-
ment the policies, and some ideas about who
should be responsible for implementing them.
Education Sector Review
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Education Sector Review Volume 2

Appendix 4.1. What Teachers Need to Know and Be Able to Do

Content knowledge:
x Understanding subject matter deeply and flexibly to help students to create cognitive maps, link
ideas, and address misconceptions
x Seeing how ideas connect across fields of knowledge and to life
x Making ideas accessible to others and understanding the perspective of the learner

Learner knowledge:
x Knowledge of child and adolescent development and how to support cognitive, social, physical, and
emotional growth, to interpret learners’ statements and actions, and to shape productive learning ex-
periences
x Understanding of and respect for differences in culture, family experience, forms of intelligence, and
approaches to learning and the ability to teach in a way that connects with students
x Inquiring sensitively, listening carefully, looking thoughtfully at student work, and structuring situa-
tions to allow students to express themselves

Motivating students:
x Understanding what individual students believe about themselves, what they care about, and how to
give them encouragement

Knowledge about learning:

x Deciding which type of learning is most appropriate in specific circumstances and which materials to
use when and for what purpose
x Ability to use different strategies for teaching, evaluating students’ knowledge, and assessing their
learning
x Capacity to understand the strengths of individual students
x Capacity to work with disabled students
x Understanding of how students acquire language (the gateway to learning) to build their skills and
create accessible learning experiences

Knowledge about curriculum resources and technologies:

x Allowing students to explore ideas, acquire and synthesize information, and frame and solve prob-
lems

Knowledge about collaboration:

x Structuring student interactions for shared learning
x Collaborating with other teachers
x Working with parents to learn more about their children and to shape supportive experiences at
school and home

Capacity to reflect:
x Assessing their own teaching practices and how to refine and improve them
x Continuously evaluating students’ progress and reshape lesson plans accordingly.

Source: OECD, 2002.

160
Chapter 4 Teacher Management System

Appendix 4.2. Supplementary Information on International Experience

This appendix provides supplementary infor- result, it would increase the number of indi-
mation on international experiences in the ar- viduals interested in teaching and make teach-
eas of teacher salaries and teacher ing an attractive career to more highly skilled
performance standards. individuals who, prior to the reform, would
have been likely to choose to enter other pro-
Teacher Salaries fessions. Second, local governments could
use the increase in resources for teacher sala-
A number of countries have begun to link
ries not only to increase the salaries of existing
teachers’ pay directly to measures of student
teachers but also to hire additional teachers,
outcomes, but this has become highly conten-
thus enabling them to reduce class sizes,
tious in many cases. Chile has the most exten-
which would probably also improve student
sive program of performance-based teacher
outcomes.
compensation, while other countries such as
Colombia and Mexico have smaller, experi-
An assessment of the reform that was carried
mental programs. However, giving perform-
out in 2002 revealed that regional disparities
ance-based salary incentives to individual
in teacher pay had been reduced and that the
teachers within a school can have negative ef-
number of teachers who had at least graduated
fects. These can inhibit teamwork among
from secondary school had increased. The
teachers in a school, which is a core principle
study also showed that the increase in teach-
involved in improving the overall quality of
ers’ compensation and in the number of teach-
education provided. It can also create unpro-
ers with at least a secondary education were
ductive competition between teachers within
positively associated with better student out-
the same school. Education policymakers in
comes such as lower dropout rates and higher
Brazil, India, and Kenya have considered
pass rates (Gordon and Vegas, 2004).
compensation and performance issues. Their
experiences are described below.
India
Brazil A study of teacher salaries in India found that
the salary structures for teachers were ineffi-
In 1998, Brazil implemented an education fi-
cient, with those teacher characteristics that
nance reform called the Fund for the Mainte-
have few discernible learning benefits for stu-
nance and Development of Primary Education
dents being rewarded in salary terms whereas
and Teacher Enhancement (FUNDEF). The
those that improve student learning were not.
main objective of this fund was to equalize
The study suggested that spending more
educational opportunities across states and
money on school facilities and materials,
municipalities by guaranteeing a minimum
longer school days, better management prac-
expenditure per pupil in primary schools
tices, and more skilled teachers would enhance
throughout the country. Embedded in the re-
school efficiency but that investing in smaller
form was a requirement that at least 60 percent
pupil-teacher ratios (in urban areas where
of the additional funds provided by FUNDEF
there is no multi-grade teaching), in teacher
must be spent on teachers’ salaries.
experience, training, and post-graduate educa-
tion, and higher across-the-board teachers’
The program was expected to improve teacher
salaries may not make sense in a resource-
quality and student outcomes in several ways.
scarce environment. Moreover, it suggested
First, it would increase the salaries of existing
that more emphasis should be put on the qual-
teachers in regions that, previous to the re-
ity of teachers’ education (in other words,
form, had had relatively low teachers’ salaries.
their knowledge of subject matter and their
This would make teaching a more attractive
cognitive skills) when selecting and remuner-
profession, particularly in these regions. As a

161
Education Sector Review
ating teachers than on their years of schooling,
training, and experience, since these inputs
were not significant in explaining variations in
school outcomes. These findings are also
likely to apply to education in Indonesia
(Kingdon, 1996).
Kenya
Kenya has pilot-tested a performance-based
incentive system that would reward all teach-
ers in a given school based on improved stu-
dent performance in grades four to eight in
that school. There were two ways in which
schools could distinguish themselves in this
performance-based scheme – either by having
the highest test scores of all of the schools in
their district or by having the most improved
test scores of all of the schools in their district.
The pilot project set out to measure the impact
and cost-effectiveness of this performance-
based incentive system that rewarded all
teachers in schools whose performance had
improved. The program was designed to take
note of five important criticisms of perform-
ance-based incentive systems in which per-
formance is judged by student outcomes:
x The first objection is that teachers are
not solely responsible for the academic
performance of their students. In order to
produce good student outcomes, teachers
in a school need to cooperate with each
other, and it is important that they do so
rather than competing against each other.
x The second objection to performance-
based incentives is that a teacher’s per-
formance is largely unobservable, and,
even when it can be observed, it is diffi-
cult to verify objectively. What consti-
tutes good performance by a teacher is
not simple or easily quantifiable; there-
fore it is difficult to compensate teachers
based on their performance.
x The third difficulty in establishing per-
formance-based incentives is that a
teacher’s job involves many different
tasks, some of which are easily measur-
able and some of which are not. For in-
stance, one objective of a teacher is to
162
Volume 2
ensure that his or her students perform
well academically. This is a measurable
task – through student test scores, for
example. However, another of their ob-
jectives is to ensure that students are so-
cially and emotionally well adjusted.
This objective is not easily measurable.
Therefore, if an incentive is based on the
measurable objective, teachers will tend
to focus on that task above all others and
may neglect the other non-measurable
but equally important tasks.
x Fourth, teachers object to being judged
based solely on their students’ academic
performance if they are teaching a diffi-
cult or disadvantaged population, per-
haps because the school is located in a
poor community where student perform-
ance has historically been weak. In this
case, it would not be fair to have teach-
ers in better-off communities judged by
the same criteria as those teaching in
disadvantaged communities.
x Fifth, basing teacher incentives on stu-
dents’ test scores can cause teachers to
neglect or force out weaker students in
order to concentrate on those students
who will perform well on the tests
(Glewwe et al, 2001).
Teacher Performance Standards
The United Kingdom
The United Kingdom (UK) school inspection
system sets performance standards and, on
school visits, its inspectors ask questions such
as: How high are standards in the school
(based on the school’s results and achieve-
ments)? How well are the pupils taught?
How good are the curricular and other oppor-
tunities offered to pupils? How well does the
school care for its pupils? How well does the
school work in partnership with parents? How
well is the school led and managed? What
should the school do to improve further? The
Office of Standards in Education (Ofsted) pre-
pares detailed inspection reports and sets pri-
orities for school and teacher development
programs. The key question asked in review-
ing classroom teaching is: How well are pupils
Chapter 4
taught? The assessment is based on classroom
observations of teaching; interviews with par-
ents, teachers, school principals, and students;
and reviews of teachers’ and students’ portfo-
lios of work. The kind of suggestions that in-
spectors make are reflected in this extract from
a school report (available on the Ofsted web-
site, www.ofsted.gov.uk):
x Review the curriculum (as
taught), ensuring that it has ap-
propriate breadth and balance
and that the required coverage is
provided for subjects other than
the core subjects of English,
mathematics, and science.
x Improve and broaden the range
of teaching approaches that are
often adopted in the non-core
subjects, particularly where
teachers feel constrained by the
detail of the lesson plans.
x Improve the quality of assess-
ment in the non-core subjects.
x Give more attention to educating
pupils for life in a multi-cultural
society.
x Ensure that training is provided
for staff in child protection and
in health and safety issues (Of-
sted, 2003).
Indonesia
Management at the school level is the
most important factor for improving the
163
Teacher Management System
quality of education. During the school
observations conducted for the Indonesian
Primary Education Quality Improvement
Project, many management-related prob-
lems appeared, such as frequent teacher
and student absenteeism, inefficient use of
instruction time, and under-qualified or
unmotivated teachers. The principals of
the project schools focused too much on
administrative tasks (for example, keeping
records of students’ test results and finan-
cial tasks) rather than on educational lead-
ership tasks. An evaluation of the project
as well as international research into edu-
cational effectiveness has shown that ef-
fective principals generally undertake the
following activities: sitting in on class-
rooms to observe the quality of teaching;
creating conditions for teachers to improve
their teaching skills; selecting high-quality
teachers, guiding less able ones, and re-
placing those who do not improve; rein-
forcing teachers’ motivation; ensuring that
school time is used efficiently; preventing
teacher and student absenteeism; control-
ling the implementation of the curriculum
in all grades; promoting an orderly and
friendly school climate; and getting par-
ents and the community involved effec-
tively in school matters. These aspects of
effective educational leadership should be
included in management training for prin-
cipals, which will mean changing current
training methods and content(Van der
Werf et al, 2002).
Education Sector Review Volume 2

164
 Report No. 29506

INDONESIA

EDUCATION IN INDONESIA:
MANAGING THE TRANSITION TO
DECENTRALIZATION
(In Three Volumes) Volume 3

STATISTICAL ANNEX

The World Bank

August 2004
 Table 1. Highest Level of Education as a Percentage of the Population, by Location

Less than Primary School Primary School Junior Secondary School

1995 1998 2000 2002 1995 1998 2000 2002 1995 1998 2000 2002
Province Urban Rural Urban Rural Urban Rural Urban Rural Urban Rural Urban Rural Urban Rural Urban Rural Urban Rural Urban Rural Urban Rural Urban Rural
Aceh 10.54 33.18 11.40 28.46 4.84 24.25 38.45 23.18 39.09 12.76 16.83 12.17 18.81 14.23 14.29
North Sumatera 21.74 43.55 15.15 29.55 11.66 29.21 9.77 20.98 24.83 31.79 25.45 37.65 24.53 35.65 23.21 38.42 21.04 13.94 19.51 18.23 19.93 18.78 22.33 21.65
West Sumatera 17.49 43.45 12.25 40.21 14.57 37.18 12.29 32.93 22.65 30.33 21.51 30.10 20.22 29.48 19.35 29.95 14.71 11.09 17.90 12.24 15.75 14.69 17.68 16.95
Riau 14.54 37.76 10.51 30.41 11.60 33.94 6.55 21.71 24.57 40.09 25.05 43.95 22.69 38.51 21.25 48.40 20.80 11.21 20.04 14.48 19.28 15.08 20.10 15.46
Jambi 15.45 42.96 15.83 36.76 15.27 35.96 11.16 27.90 29.86 38.11 26.38 37.80 24.15 36.46 27.37 43.29 18.13 9.09 18.44 11.25 18.81 15.15 17.49 14.54
South Sumatera 24.74 47.57 18.03 40.00 18.97 32.82 12.36 31.85 28.81 36.75 30.03 39.02 26.77 44.13 29.59 47.64 14.21 8.04 17.36 10.77 17.08 11.87 16.85 11.76
Bengkulu 14.23 40.79 11.05 38.82 10.55 37.34 9.88 31.68 22.95 34.38 22.70 36.17 20.86 37.40 19.08 39.56 17.23 9.88 17.83 10.60 19.16 10.90 18.71 13.91
Lampung 26.53 48.79 21.61 39.23 17.25 42.02 17.04 31.39 24.56 33.17 26.91 40.50 27.42 36.59 26.36 41.17 14.80 8.34 14.65 9.48 16.22 10.82 17.58 15.41
Bangka Belitung 19.94 35.23 33.29 49.78 17.29 7.85
Jakarta 10.79 8.34 9.05 6.70 26.72 22.77 23.10 21.27 18.53 18.25 17.61 18.15
West Java 21.56 43.27 16.99 35.11 15.38 34.87 14.58 28.68 31.19 44.62 31.59 49.83 32.57 49.20 33.02 55.82 14.13 5.82 15.61 7.04 15.77 8.01 15.70 8.20
Central Java 25.13 42.79 20.63 37.82 19.06 33.71 19.60 32.03 32.76 42.35 33.30 45.27 33.96 46.84 33.05 48.24 14.18 6.70 14.97 7.76 15.69 9.51 15.43 10.06
DI Yogyakarta 20.09 31.11 16.55 29.17 16.86 25.52 13.29 21.28 26.19 40.28 25.38 39.94 25.07 39.37 22.91 42.89 14.62 11.71 14.91 12.63 16.40 14.53 16.18 15.16
East Java 24.65 47.00 16.86 38.74 15.96 34.98 16.33 32.01 29.20 37.11 30.17 42.36 30.50 43.33 31.36 47.43 14.99 7.15 17.18 8.82 18.32 10.62 17.06 10.46
Banten 10.64 36.11 21.74 46.64 18.47 10.33
Bali 17.51 32.10 14.46 25.82 10.39 26.61 12.00 22.39 30.44 40.57
27.91 43.95 28.60 41.18 27.79 42.57 11.22 7.10
11.63 9.70 12.85 10.39 12.40 12.89
West Nusa Tenggara 27.03 46.89 26.40 43.18 30.09 38.91 24.15 34.89 23.59 31.49
23.87 30.54 22.45 30.95 26.46 36.14 12.36 8.10
12.12 9.37 13.65 10.89 12.80 12.50
East Nusa Tenggara 21.48 42.96 17.34 38.70 16.41 40.42 12.67 36.28 24.02 38.26
22.29 40.66 21.37 40.93 21.97 43.69 15.35 6.74
13.39 7.84 15.08 7.43 14.97 8.80
West Kalimantan 28.19 56.88 14.38 28.40 20.16 42.76 17.99 37.02 26.52 26.87
23.83 24.86 23.16 32.98 24.10 36.99 13.67 6.8717.15 14.73 17.48 13.40 16.97 14.04
Central Kalimantan 15.45 30.82 22.05 46.63 12.49 21.20 10.26 21.82 29.25 43.45
21.21 30.33 28.15 47.71 27.29 46.23 15.99 14.57
16.70 10.50 21.53 17.60 19.35 19.49
South Kalimantan 26.32 48.94 11.64 27.85 20.70 42.25 15.64 37.80 27.95 33.60
29.37 44.56 26.16 36.21 27.90 39.15 14.24 7.28
15.51 15.19 15.99 9.67 16.44 11.75
East Kalimantan 19.20 39.86 19.75 43.77 15.08 32.15 11.11 22.92 25.23 33.00
26.81 34.42 22.94 39.08 23.21 41.05 14.38 11.26
15.78 8.72 17.86 14.49 19.08 17.40
North Sulawesi 17.87 35.17 17.30 33.02 14.34 30.21 11.76 24.35 24.80 34.12
23.40 34.42 23.36 36.87 18.25 38.21 17.52 13.01
17.14 13.28 21.35 16.46 19.39 17.25
Central Sulawesi 14.95 36.84 15.90 32.34 11.15 29.66 9.26 22.09 24.25 40.61
21.75 35.57 21.88 41.17 23.09 47.75 15.55 9.73
17.61 14.63 15.66 13.40 16.11 14.81
South Sulawesi 17.31 38.21 13.63 30.48 14.64 31.74 12.56 29.45 24.44 35.96
20.71 41.88 20.11 34.96 20.84 37.39 12.89 10.59
14.79 12.11 14.69 13.41 14.45 14.84
Southeast Sulawesi 19.20 35.10 14.95 35.03 10.08 25.87 10.99 23.82 19.74 35.89
23.14 34.17 19.45 36.51 18.88 36.92 11.97 11.09
14.76 12.37 16.47 16.61 15.89 17.50
Gorontolo 17.35 26.58 22.08 44.20 22.82 38.75 24.72 36.12 14.18 14.65 16.32 9.71
Maluku 11.88 34.93 7.78 29.35 2.06 1.35 26.07 42.94 24.88 45.28 18.27 52.70 16.21 11.97 19.16 11.98 17.90 12.83
North Maluku 13.56 12.82 19.05 56.37 20.63 14.52
Irian Jaya 15.18 36.66 8.96 32.77 8.06 34.87 1.88 2.21 18.85 36.71 20.25 37.28 27.54 41.88 13.85 53.32 18.46 11.09 17.83 12.62 19.12 11.78 17.71 24.46
INDONESIA 20.44 43.15 15.86 36.25 15.2 34.4 13.9 30.1 28.6 38.6 28.24 42.06 28.7 42.4 28.10 45.90 15.6 8.25 16.6 9.93 16.9 11.2 16.91 12.17
Source: SUSENAS, several years
Notes: Population defined as over 24 years old
Missing values due to civil unrest or governmental changes (as several provinces developed post 1999)
Sample size for all individual SUSENAS data: 1995 - 873,647; 1998 - 879,936;2000 – 780,141; 2002 – 862,210

1
Table 1. Highest Level of Education, cont.

Senior Secondary School Higher Education

1995 1998 2000 2002 1995 1998 2000 2002
Province Urban Rural Urban Rural Urban Rural Urban Rural Urban Rural Urban Rural Urban Rural Urban Rural
Aceh 36.41 12.91 35.39 14.78 44.99 11.97 3.29 11.22 3.45 23.12
North Sumatera 25.40 9.54 31.99 13.08 34.71 14.62 35.55 16.77 6.99 1.18 7.90 1.49 9.18 1.74 9.14 2.18
West Sumatera 33.27 12.77 34.77 14.20 34.45 15.39 34.79 15.57 11.87 2.36 13.57 3.25 15.01 3.26 15.89 4.60
Riau 32.54 9.45 35.24 9.75 36.73 11.14 42.41 12.56 7.55 1.50 9.16 1.41 9.70 1.34 9.68 1.87
Jambi 28.00 8.95 29.92 11.95 31.14 10.68 33.39 11.52 8.56 0.89 9.42 2.25 10.62 1.75 10.59 2.75
South Sumatera 25.70 6.82 28.04 8.84 26.80 9.98 31.71 7.68 6.53 0.82 6.53 1.37 10.38 1.19 9.49 1.06
Bengkulu 34.35 13.20 36.66 12.97 38.29 12.21 37.09 12.70 11.25 1.74 11.77 1.43 11.14 2.16 15.24 2.15
Lampung 24.36 8.44 26.10 9.64 30.39 9.26 28.48 10.25 9.74 1.26 10.74 1.14 8.72 1.33 10.54 1.78
Bangka Belitung 24.14 5.52 5.34 1.63
Jakarta 33.22 37.36 36.04 36.78 10.73 13.29 14.20 17.10
West Java 25.60 5.64 27.17 6.49 28.12 6.64 27.31 5.60 7.53 0.66 8.63 1.54 8.16 1.28 9.38 1.70
Central Java 22.00 6.92 23.37 7.43 23.53 8.19 22.35 7.44 5.93 1.25 7.72 1.72 7.76 1.74 9.57 2.24
DI Yogyakarta 28.67 14.43 29.72 14.85 29.73 16.11 32.10 16.48 10.43 2.46 13.45 3.42 11.94 4.46 15.52 4.20
East Java 23.88 7.30 27.63 8.26 27.32 9.15 26.07 7.99 7.28 1.44 8.16 1.82 7.90 1.92 9.19 2.11
Banten 35.08 6.18 14.07 0.74
Bali 30.85 16.08 32.56 16.65 35.61 18.14 33.03 17.66 9.98 4.15 13.45 3.88 12.56 3.68 14.79 4.50
West Nusa Tenggara 25.54 11.65 28.24 13.47 26.92 15.45 27.11 14.06 11.48 1.87 9.38 3.45 6.88 3.80 9.47 2.41
East Nusa Tenggara 28.05 9.73 35.74 10.76 36.55 9.30 36.69 9.08 11.09 2.31 11.24 2.03 10.58 1.92 13.70 2.16
West Kalimantan 27.03 8.62 33.33 27.70 28.70 9.64 30.24 10.25 4.59 0.76 11.31 4.31 10.50 1.23 10.69 1.70
Central Kalimantan 29.05 10.26 29.92 11.06 29.61 12.27 32.89 10.69 10.26 0.91 10.13 1.47 8.21 1.23 10.22 1.77
South Kalimantan 24.94 9.06 32.55 11.44 29.32 10.49 29.95 8.81 6.55 1.12 10.93 0.96 7.82 1.39 10.07 2.50
East Kalimantan 31.61 14.33 28.84 11.44 34.87 13.01 36.83 16.00 9.59 1.56 8.81 1.66 9.24 1.27 9.77 2.64
North Sulawesi 31.88 15.01 32.62 16.65 33.14 14.16 39.86 17.83 7.93 2.69 9.53 2.63 7.81 2.29 10.74 2.36
Central Sulawesi 32.12 11.40 34.90 14.44 37.88 14.03 38.15 12.90 13.13 1.42 9.84 3.02 13.43 1.74 13.39 2.45
South Sulawesi 32.54 12.71 36.44 12.97 37.13 16.39 37.92 14.61 12.81 2.52 14.42 2.56 13.43 3.50 14.22 3.72
Southeast Sulawesi 33.80 15.71 34.02 15.30 39.54 18.33 38.18 17.75 15.29 2.21 13.14 3.13 14.46 2.68 16.06 4.01
Gorontolo 33.35 17.08 29.51 7.73 12.31 2.93 7.36 2.24
Maluku 36.17 9.20 38.32 11.36 45.34 27.72 9.68 0.95 9.85 2.04 16.43 5.40
North Maluku 36.82 15.43 9.93 0.86
Irian Jaya 35.04 12.97 42.62 14.05 36.35 10.02 50.37 15.56 12.47 2.57 10.33 3.27 8.93 1.44 16.19 4.45
INDONESIA 27.11 8.57 29.76 9.81 29.72 10.16 30.03 9.65 8.27 1.42 9.58 1.94 9.41 1.85 11.05 2.20
Source: SUSENAS, several years
Note: Population defined as over 24 years old.
Missing values due to civil unrest or governmental changes (as several provinces developed post 1999)

2
Table 2. Net and Gross Primary Enrollment Rates, by Gender

Net Primary Enrollment Gross Primary Enrollment

1995 1998 2000 2002 1995 1998 2000 2002
Province Male Female Male Female Male Female Male Female Male Female Male Female Male Female Male Female
Aceh 91.43 92.55 93.23 93.12 91.49 92.42 106.25 104.53 106.72 106.09 97.88 96.62
North Sumatera 93.75 93.90 93.87 93.77 94.47 93.97 93.99 93.59 109.02 109.25 111.32 108.79 110.32 108.99 107.71 106.89
West Sumatera 91.84 92.64 92.57 92.45 92.86 92.44 92.38 92.22 107.66 107.09 107.92 107.33 110.40 107.59 104.11 103.91
Riau 95.31 93.15 94.12 94.31 94.11 93.77 94.16 94.29 112.27 109.58 108.19 108.92 108.46 107.40 107.88 106.88
Jambi 90.86 91.12 91.34 90.61 92.52 93.05 93.70 92.43 106.75 104.04 106.14 104.66 108.67 109.74 108.79 106.87
South Sumatera 89.20 89.74 91.16 91.75 92.48 92.07 91.84 91.19 104.82 104.81 107.35 105.52 108.28 105.42 108.45 107.49
Bengkulu 92.20 90.55 91.97 92.12 91.82 91.20 92.44 92.54 110.57 106.55 111.65 106.28 109.14 105.24 107.37 107.50
Lampung 91.25 92.57 93.08 91.94 93.56 92.80 92.91 93.26 105.88 108.54 107.03 106.84 113.45 110.15 106.54 105.42
Bangka Belitung 92.49 94.39 108.56 107.60
Jakarta 93.56 92.75 93.01 92.47 91.28 91.62 89.96 91.62 110.00 107.28 108.75 108.12 105.72 108.59 102.85 105.99
West Java 90.36 91.37 92.53 93.11 92.35 92.97 93.59 94.07 103.14 103.75 105.22 105.60 105.09 104.39 104.34 104.58
Central Java 94.27 93.63 94.31 94.30 93.98 93.74 94.46 93.70 111.37 109.19 110.80 110.75 111.80 110.22 108.54 107.79
DI Yogyakarta 95.25 95.75 92.91 95.20 93.49 95.25 93.41 93.03 115.02 111.04 110.32 110.48 109.93 110.69 106.36 103.06
East Java 93.44 92.49 93.07 91.55 92.24 92.43 93.15 93.24 110.28 107.80 110.41 106.52 108.32 107.03 107.15 107.30
Banten 92.49 93.74 103.27 105.26
Bali 93.67 93.33 94.03 93.06 93.68 93.01 93.28 90.98 106.45 107.23 110.77 110.76 108.55 109.50 106.48 103.31
West Nusa Tenggara 87.38 89.74 90.69 91.52 88.19 91.65 92.70 93.77 100.82 102.38 101.63 101.54 102.10 102.32 102.20 104.72
East Nusa Tenggara 84.71 86.67 86.52 88.74 87.96 90.00 86.59 87.59 104.97 108.51 109.89 111.34 110.88 110.50 106.45 107.02
East Timor 72.93 70.64 70.68 69.55 93.83 92.34 90.19 90.21
West Kalimantan 84.65 84.53 88.02 89.09 90.02 89.04 89.95 88.94 106.69 108.09 112.51 111.06 107.73 111.54 110.53 107.18
Central Kalimantan 94.39 94.39 94.68 93.00 93.77 94.83 94.23 93.78 110.10 114.92 116.55 113.23 111.17 113.65 110.39 112.54
South Kalimantan 92.07 91.70 93.17 92.12 92.15 92.77 90.92 92.53 109.22 107.66 110.35 107.23 108.43 107.73 103.58 104.55
East Kalimantan 93.19 91.10 92.93 92.09 90.83 92.15 92.21 91.57 114.03 113.26 113.18 110.15 108.50 114.51 108.29 107.90
North Sulawesi 87.64 87.94 90.06 90.86 90.04 90.79 87.67 87.74 105.00 105.04 109.95 111.64 109.05 107.66 101.64 105.85
Central Sulawesi 89.46 92.95 90.04 89.74 90.60 91.59 89.81 90.49 104.28 110.16 108.08 108.59 106.80 110.96 104.88 106.94
South Sulawesi 85.46 87.75 85.75 88.33 88.13 89.08 88.84 89.11 100.45 100.86 98.98 103.08 102.65 103.90 100.60 100.40
Southeast Sulawesi 88.74 88.43 89.93 90.49 88.57 90.43 90.60 88.77 106.64 107.04 106.22 106.65 103.90 103.00 104.20 102.83
Gorontolo 78.15 83.84 88.13 98.17
Maluku 92.07 92.33 90.77 91.53 87.42 86.42 112.84 112.95 106.88 108.25 98.52 109.51
Irian Jaya 81.17 77.69 79.16 79.77 81.03 82.77 95.46 94.33 103.35 97.61 98.45 97.58 104.30 101.41 106.29 107.40
North Maluku 94.53 90.59 116.07 103.92

INDONESIA 91.38 91.53 92.05 92.11 92.13 92.45 92.65 92.75 107.31 106.67 107.95 107.22 108.03 107.30 105.98 105.98
Source: SUSENAS, several years
Note: Missing values due to civil unrest or governmental changes (as several provinces developed post 1999)

3
Table 3. Net and Gross Junior Secondary Enrollment Rates, by Gender

Net Junior Secondary Enrollment Gross Junior Secondary Enrollment

1995 1998 2000 2002 1995 1998 2000 2002
Province Male Female Male Female Male Female Male Female Male Female Male Female Male Female Male Female
Aceh 53.59 50.85 58.89 57.65 76.37 83.93 67.65 63.67 74.90 69.68 98.17 101.81
North Sumatera 61.80 60.06 61.29 65.28 66.47 68.02 67.94 70.21 77.84 74.85 83.32 82.51 82.78 85.02 87.19 88.97
West Sumatera 52.91 62.19 59.17 65.02 59.47 66.59 62.15 69.77 73.85 79.34 77.37 85.40 81.02 87.11 85.01 93.84
Riau 52.69 48.97 57.03 60.72 61.03 64.54 63.67 64.07 68.20 63.92 72.53 73.61 80.35 85.94 85.02 81.67
Jambi 46.68 47.03 53.35 52.25 56.04 56.92 61.88 60.18 61.54 59.93 77.17 71.90 80.23 77.08 80.36 79.10
South Sumatera 45.55 43.24 54.95 54.46 58.34 60.85 53.81 53.33 60.86 57.02 73.46 68.16 76.70 75.44 72.25 72.27
Bengkulu 48.58 51.98 46.74 55.33 55.89 58.87 58.72 59.57 65.61 67.38 64.46 71.37 74.78 77.15 76.59 78.01
Lampung 52.33 54.56 56.22 57.55 57.04 61.89 60.74 64.93 69.27 67.78 74.54 77.06 73.67 82.11 79.88 84.20
Bangka Belitung 42.33 48.24 58.33 61.07
Jakarta 72.98 71.04 76.86 75.01 79.34 74.90 79.46 75.54 97.62 93.43 101.57 95.74 102.93 93.11 104.39 96.76
West Java 47.61 47.57 53.01 56.21 56.73 58.78 60.98 60.57 61.64 58.16 66.33 68.38 71.83 72.36 75.87 76.09
Central Java 50.63 53.86 59.51 62.34 60.60 64.62 62.99 66.50 64.85 68.19 76.23 77.46 79.70 81.30 81.68 83.74
DI Yogyakarta 66.06 72.16 69.72 72.56 72.31 78.74 75.53 77.71 86.83 89.36 89.29 89.77 90.30 93.25 100.80 100.10
East Java 52.28 52.19 58.78 59.15 62.07 64.68 62.49 64.87 68.11 65.43 75.58 75.27 83.58 83.21 83.38 83.77
Banten 61.20 60.30 75.26 73.53
Bali 66.15 58.08 71.22 64.18 74.85 65.52 69.24 67.53 87.22 70.09 91.17 81.98 91.58 78.18 90.28 88.36
West Nusa Tenggara 40.46 38.74 48.94 50.22 58.63 57.77 59.51 55.81 52.62 48.33 61.99 61.55 77.81 69.39 74.33 69.03
East Nusa Tenggara 29.43 27.24 31.97 34.53 32.02 36.59 37.12 40.23 44.45 38.91 47.84 50.30 48.55 54.63 57.04 61.68
East Timor 29.37 24.58 33.50 34.41 52.84 45.86 57.26 52.69
West Kalimantan 33.98 34.19 39.61 42.23 49.09 44.95 43.33 46.79 49.58 53.86 61.25 60.37 68.10 64.16 62.82 64.01
Central Kalimantan 49.96 50.58 46.09 46.60 59.58 62.07 54.07 51.41 64.95 67.89 64.46 63.89 78.48 79.23 66.85 70.27
South Kalimantan 44.64 46.66 51.96 52.65 50.02 53.73 56.33 55.39 57.16 56.50 70.23 69.62 63.61 67.16 75.15 75.32
East Kalimantan 53.96 59.05 60.59 56.88 62.11 58.56 59.26 65.84 71.08 76.77 76.83 77.14 85.42 78.30 85.65 89.16
North Sulawesi 47.65 54.26 54.38 56.15 61.68 64.69 66.27 67.13 62.15 72.31 68.02 69.48 78.88 80.36 87.34 87.84
Central Sulawesi 44.13 42.50 45.79 50.86 48.70 48.40 49.21 53.51 55.84 50.65 63.14 62.08 66.38 60.78 69.85 72.11
South Sulawesi 43.56 45.52 48.69 48.20 50.62 54.26 51.44 54.97 56.91 57.01 62.75 59.78 66.12 69.07 65.58 71.95
Southeast Sulawesi 48.28 48.68 55.22 56.99 56.91 64.63 55.21 61.64 60.66 65.52 71.78 76.07 76.12 81.59 74.37 83.47
Gorontolo 42.97 41.85 59.99 56.59
Maluku 46.19 46.00 57.92 56.06 70.94 74.29 63.84 63.09 79.41 73.38 95.95 101.75
Irian Jaya 40.43 38.92 40.76 44.88 31.45 39.77 82.10 83.20 65.32 55.47 64.55 64.53 50.53 59.35 96.24 100.53
North Maluku 66.88 77.64 84.72 98.27
INDONESIA 50.70 51.24 56.25 58.04 59.06 61.56 60.92 62.51 66.34 64.94 73.31 73.38 77.24 78.02 79.35 80.41
Source: SUSENAS, several years
Note: Missing values due to civil unrest or governmental changes (as several provinces developed post 1999)

4
Table 4. Net and Gross Senior Secondary Enrollment Rates, by Gender

Net Senior Secondary Enrollment Gross Senior Secondary Enrollment

1995 1998 2000 2002 1995 1998 2000 2002
Province Male Female Male Female Male Female Male Female Male Female Male Female Male Female Male Female
Aceh 32.01 29.20 37.19 35.90 77.39 76.77 44.05 37.04 46.94 45.16 90.48 94.12
North Sumatera 43.05 41.86 45.20 49.40 49.58 52.98 49.31 48.88 57.20 53.61 57.54 62.08 65.00 65.91 60.87 61.30
West Sumatera 36.05 44.89 44.37 51.05 44.36 53.33 45.60 51.89 47.95 56.44 54.18 64.65 61.82 68.24 59.39 66.02
Riau 27.37 27.05 32.94 34.24 38.80 40.33 39.28 42.10 36.91 35.09 42.40 43.32 53.35 50.92 52.44 51.26
Jambi 24.91 26.90 26.43 31.14 36.13 35.99 36.42 35.00 36.24 34.41 34.65 40.42 44.61 43.80 44.81 44.39
South Sumatera 23.34 28.09 32.29 33.26 35.43 39.63 33.88 34.76 32.11 36.61 41.54 41.79 46.06 51.25 46.15 45.56
Bengkulu 29.01 38.15 34.77 40.37 35.01 44.63 29.77 43.95 40.86 47.70 45.39 50.57 48.04 57.31 38.66 57.93
Lampung 29.92 30.71 30.31 28.76 31.79 30.74 30.55 31.49 38.70 38.14 38.80 40.42 42.99 40.01 38.20 39.13
Bangka Belitung 36.92 33.82 50.06 45.90
Jakarta 60.99 47.99 67.96 60.80 60.85 56.93 65.39 50.56 83.12 62.54 88.36 76.43 81.04 72.77 79.37 62.18
West Java 28.80 25.69 34.97 33.71 35.93 36.05 35.24 30.66 37.52 32.24 44.81 41.26 45.83 42.65 44.07 36.00
Central Java 34.12 30.21 35.05 35.60 38.09 38.63 38.97 37.36 43.57 36.73 43.96 42.79 49.79 47.09 49.65 47.19
DI Yogyakarta 52.48 56.79 56.82 57.46 58.91 63.09 56.45 60.85 76.99 70.42 75.36 69.71 76.54 75.46 72.90 78.41
East Java 35.11 30.67 38.22 36.82 39.65 41.41 39.03 38.80 45.62 38.45 48.23 45.46 51.49 50.59 50.77 48.30
Banten 38.17 37.36 46.75 46.07
Bali 49.72 40.88 53.40 47.33 53.00 54.82 55.27 46.09 63.77 52.44 64.44 57.99 66.41 69.56 68.93 57.21
West Nusa Tenggara 27.78 24.02 30.54 24.12 33.80 36.64 36.44 35.37 39.36 29.44 36.10 29.64 45.03 49.29 41.85 40.43
East Nusa Tenggara 17.76 16.12 23.18 21.51 20.57 20.39 20.10 23.50 30.65 24.60 36.18 29.77 30.92 29.07 30.78 31.74
East Timor 18.26 17.86 19.48 23.65 43.38 36.70 41.42 37.45
West Kalimantan 21.15 18.75 24.90 26.11 20.75 26.50 23.22 26.18 30.68 26.04 35.99 35.02 28.37 37.40 31.86 34.66
Central Kalimantan 31.30 32.27 23.57 29.95 34.25 33.36 30.11 30.56 38.90 38.80 30.73 40.58 43.86 42.22 40.10 41.64
South Kalimantan 24.07 26.91 30.83 30.26 30.53 31.57 28.76 27.21 33.74 34.03 38.62 37.70 40.20 37.02 35.65 33.30
East Kalimantan 39.08 39.71 44.39 42.66 44.92 39.57 41.57 48.30 51.45 48.84 57.74 58.05 67.89 55.02 59.40 63.65
North Sulawesi 28.94 32.88 35.85 38.76 41.15 38.20 39.50 47.98 38.82 44.71 46.88 49.70 50.86 49.44 51.24 63.06
Central Sulawesi 26.40 29.10 24.88 30.56 29.43 31.68 25.49 28.31 33.98 37.62 34.93 37.98 39.72 38.54 35.97 38.55
South Sulawesi 28.19 32.86 33.59 32.37 34.60 35.44 35.88 33.28 40.16 41.33 43.89 40.27 46.01 47.05 44.62 41.26
Southeast Sulawesi 35.21 35.32 36.93 36.96 35.60 41.14 32.50 39.61 46.60 44.70 47.53 49.87 44.46 53.33 44.83 44.78
Gorontolo 19.31 27.01 27.21 39.31
Maluku 34.28 36.53 39.25 44.23 71.69 63.78 44.67 51.26 52.73 54.95 93.63 83.92
Irian Jaya 23.75 26.75 29.73 32.92 28.61 31.93 74.81 78.28 38.35 38.00 45.04 42.82 45.47 39.80 95.10 95.09
North Maluku 70.94 69.66 88.24 88.89
INDONESIA 33.47 31.70 37.46 37.45 38.63 40.07 38.79 37.68 44.60 40.21 48.08 46.78 50.66 49.76 49.39 46.89
Source: SUSENAS
Note: Missing values due to civil unrest or governmental changes (as several provinces developed post 1999)

5
Table 5. Net and Gross Primary Enrollment Rates, by location

Net Primary Enrollment Gross Primary Enrollment

1995 1998 2000 2002 1995 1998 2000 2002
Province Urban Rural Urban Rural Urban Rural Urban Rural Urban Rural Urban Rural Urban Rural Urban Rural
Aceh 92.38 91.90 92.23 93.43 91.91 105.42 105.39 108.02 105.99 97.30
North Sumatera 94.06 93.69 92.60 94.62 93.86 94.47 93.31 94.11 107.12 110.27 109.88 110.25 107.57 111.05 106.12 108.10
West Sumatera 92.04 92.27 93.10 92.33 91.85 92.92 90.82 92.92 109.12 106.92 109.08 107.19 107.10 109.69 101.89 104.89
Riau 96.23 93.39 93.58 94.50 93.99 93.92 94.31 94.17 112.21 110.40 109.45 108.11 106.89 108.59 107.10 107.61
Jambi 91.72 90.76 91.69 90.74 89.33 93.74 90.38 94.14 107.31 104.85 107.35 104.75 105.12 110.32 103.78 109.46
South Sumatera 89.42 89.49 91.22 91.53 90.43 93.10 89.70 92.43 106.40 104.25 109.68 105.31 106.04 107.24 106.62 108.65
Bengkulu 92.50 91.10 90.67 92.48 93.24 90.89 89.84 93.57 109.21 108.44 107.25 109.60 106.30 107.48 103.49 109.05
Lampung 92.58 91.77 92.45 92.54 93.86 93.05 94.21 92.79 109.81 106.72 108.39 106.69 108.19 112.75 104.64 106.34
Bangka Belitung 89.88 95.35 103.34 110.68
Jakarta 93.17 92.75 91.45 90.73 108.69 108.45 107.13 104.31
West Java 91.45 90.46 93.60 92.20 92.74 92.58 93.15 94.53 104.82 102.55 107.52 103.80 105.90 103.76 104.92 103.96
Central Java 93.92 93.98 94.26 94.33 93.25 94.21 93.27 94.67 110.47 110.24 110.23 111.02 109.80 111.73 106.79 109.13
DI Yogyakarta 96.48 94.54 92.47 95.59 94.50 94.16 93.31 93.14 114.17 111.99 106.25 114.72 109.09 111.52 104.48 105.10
East Java 93.89 92.61 93.36 91.84 93.69 91.48 93.46 93.02 108.77 109.19 108.43 108.56 108.38 107.26 107.16 107.27
Banten 94.07 92.11 105.95 102.49
Bali 93.10 93.70 93.24 93.76 92.10 94.30 91.80 92.58 109.71 105.53 111.09 110.59 108.41 109.43 105.68 104.28
West Nusa Tenggara 91.07 88.08 92.47 90.80 87.13 91.13 94.12 92.74 102.92 101.35 104.25 101.05 99.51 103.45 105.41 102.37
East Nusa Tenggara 90.60 85.00 90.73 87.18 89.80 88.80 89.89 86.59 108.90 106.39 111.81 110.44 106.82 111.31 106.43 106.77
East Timor 83.40 70.88 89.98 68.11 111.27 91.60 110.84 88.09
West Kalimantan 92.28 82.94 88.56 88.53 91.36 89.03 90.18 89.25 116.46 105.36 110.39 112.14 110.93 109.29 107.27 109.42
Central Kalimantan 90.54 95.30 92.74 94.09 93.99 94.34 91.46 94.90 103.70 114.33 114.12 115.05 108.68 113.41 105.82 113.36
South Kalimantan 92.97 91.47 91.78 93.02 91.37 92.92 91.40 91.86 107.77 108.71 106.45 109.79 105.88 109.06 102.64 104.80
East Kalimantan 92.11 92.23 91.88 93.14 91.37 91.50 91.56 92.33 110.12 116.81 108.27 114.99 111.70 110.83 106.56 109.99
North Sulawesi 90.06 87.06 87.60 91.35 88.93 91.03 85.75 88.75 111.68 102.91 107.33 111.85 109.96 107.71 106.41 101.95
Central Sulawesi 91.59 90.90 89.78 89.94 90.59 91.19 86.97 90.78 108.39 106.59 104.98 109.25 104.76 109.68 103.72 106.29
South Sulawesi 90.78 85.25 89.05 86.24 88.52 88.60 88.83 89.02 106.10 98.93 101.24 100.79 101.53 103.84 100.01 100.69
Southeast Sulawesi 89.35 88.41 89.09 90.54 89.29 89.50 90.33 89.60 108.28 106.49 106.78 106.32 103.51 103.46 103.83 103.48
Gorontolo 85.95 79.06 101.19 89.96
Maluku 91.35 92.36 88.57 91.82 86.73 87.76 114.42 112.57 103.85 108.51 104.73 100.04
Irian Jaya 87.48 77.58 93.16 75.63 91.24 79.10 95.92 81.14 103.56 100.00 107.42 95.48 105.66 102.15 108.14 87.38
North Maluku 90.99 100.00 110.43 107.99
INDONESIA 92.64 90.90 92.85 91.69 92.49 92.16 92.55 92.80 107.88 106.59 108.29 107.24 107.19 107.97 105.54 106.30
Source: SUSENAS, several years
Note: Missing values due to civil unrest or governmental changes

6
Table 6. Net and Gross Junior Secondary Enrollment Rates, by Location

Net Junior Secondary Enrollment Gross Junior Secondary Enrollment

1995 1998 2000 2002 1995 1998 2000 2002
Province Urban Rural Urban Rural Urban Rural Urban Rural Urban Rural Urban Rural Urban Rural Urban Rural
Aceh 69.16 48.70 69.15 55.39 80.19 88.62 60.89 92.53 66.94 100.01
North Sumatera 69.81 55.95 67.61 60.33 74.10 62.95 73.96 65.50 87.45 70.15 91.61 77.08 95.10 76.90 96.10 82.28
West Sumatera 70.72 53.61 72.15 58.53 70.03 60.78 73.50 62.93 97.89 70.24 93.83 76.96 95.09 80.52 100.23 85.04
Riau 70.67 41.77 71.86 52.79 73.32 56.08 76.57 56.12 91.58 54.39 90.93 64.77 95.35 75.33 98.18 74.39
Jambi 73.39 36.93 68.78 45.84 72.90 50.82 73.72 55.97 94.45 48.18 97.10 64.78 100.87 70.87 100.37 71.49
South Sumatera 62.47 36.21 68.35 48.35 67.19 55.80 70.72 44.89 82.95 48.07 89.77 61.94 88.96 69.57 99.65 58.39
Bengkulu 70.53 43.63 68.69 44.71 70.00 52.23 68.50 55.14 91.59 58.25 94.20 58.58 90.46 70.06 94.41 69.98
Lampung 65.79 51.07 69.77 54.36 66.09 57.53 69.70 61.07 80.59 66.24 94.28 72.17 86.42 75.29 93.00 79.22
Bangka Belitung 64.16 30.96 87.27 39.01
Jakarta 71.99 75.89 77.01 77.49 95.48 98.52 97.78 100.55
West Java 64.44 35.25 67.84 43.08 68.15 48.12 70.08 50.05 81.34 44.19 83.82 53.07 86.67 58.71 89.45 60.39
Central Java 63.54 46.91 69.60 56.19 69.60 58.22 70.28 60.76 81.01 59.70 87.43 71.12 89.92 74.60 90.92 76.84
DI Yogyakarta 72.89 65.38 78.06 63.26 78.85 71.46 78.55 74.26 92.05 84.27 97.95 79.94 96.44 86.26 100.50 100.39
East Java 66.37 45.13 72.03 51.91 74.15 55.88 73.42 56.68 82.58 58.89 92.06 66.47 94.97 75.44 96.19 74.56
Banten 76.51 44.00 91.40 56.33
Bali 68.76 59.02 75.14 63.68 73.77 68.10 73.18 63.66 89.87 73.43 92.63 83.48 91.93 80.34 99.18 79.55
West Nusa Tenggara 53.92 36.63 55.22 48.32 59.83 57.31 61.82 54.97 70.68 46.34 68.10 60.34 78.95 70.59 77.81 67.72
East Nusa Tenggara 64.45 21.48 64.21 27.00 68.17 27.21 68.19 32.68 90.74 32.40 89.89 40.83 94.98 42.50 95.99 51.90
East Timor 40.05 25.73 56.06 31.47 73.01 47.03 88.13 51.34
West Kalimantan 61.13 26.08 56.05 36.77 66.65 40.13 66.50 37.97 86.09 41.38 86.45 53.87 90.81 57.46 93.21 53.66
Central Kalimantan 73.68 43.77 63.42 41.47 71.99 56.99 66.74 47.87 99.53 57.18 88.55 57.22 91.30 74.69 92.00 60.10
South Kalimantan 65.61 37.47 67.53 45.52 66.08 44.80 72.51 48.38 80.44 47.10 90.10 60.96 83.22 56.54 97.12 65.34
East Kalimantan 72.28 43.12 70.53 47.05 65.43 53.45 67.77 56.63 93.14 57.61 90.56 63.48 87.78 73.92 95.23 78.40
North Sulawesi 63.15 47.35 66.52 50.97 74.24 58.44 70.76 64.23 86.36 61.59 87.05 61.84 97.08 72.20 96.23 82.39
Central Sulawesi 69.60 35.59 66.37 42.71 66.57 43.96 67.14 47.52 85.50 43.69 84.25 55.95 82.35 58.82 96.88 64.70
South Sulawesi 61.10 38.83 64.71 41.66 62.58 48.53 66.27 48.04 75.80 50.48 80.29 53.33 79.69 62.97 88.48 60.95
Southeast Sulawesi 70.33 42.00 61.84 53.98 66.32 59.22 76.08 53.91 88.25 55.53 83.56 70.35 91.17 75.75 99.80 73.59
Gorontolo 61.42 34.50 79.99 49.32
Maluku 69.41 38.79 76.66 50.62 73.15 71.37 94.46 53.76 105.41 67.21 96.83 109.37
Irian Jaya 68.10 30.73 73.70 31.66 66.69 24.57 84.50 57.22 95.30 49.77 103.17 50.96 103.84 37.91 97.40 114.60
North Maluku 68.10 30.73 72.74 68.87 93.66 75.15
INDONESIA 66.51 42.65 69.74 49.63 70.53 53.44 71.90 54.13 85.19 55.21 89.44 63.78 90.82 68.83 93.53 69.74
Source: SUSENAS, several years
Note: Missing values due to civil unrest or governmental changes

7
Table 7. Net and Gross Senior Secondary Enrollment Rates, by Location

Net Senior Secondary Enrollment Gross Senior Secondary Enrollment

1995 1998 2000 2002 1995 1998 2000 2002
Province Urban Rural Urban Rural Urban Rural Urban Rural Urban Rural Urban Rural Urban Rural Urban Rural
Aceh 57.13 23.44 55.77 30.49 77.11 75.23 31.17 74.86 36.98 92.13
North Sumatera 55.62 32.70 60.55 36.12 63.55 42.34 58.42 41.02 71.02 43.86 76.77 45.50 81.39 53.87 73.34 50.42
West Sumatera 57.59 33.30 66.94 38.86 67.50 40.34 65.26 41.02 74.98 42.56 82.20 49.01 88.61 54.30 87.10 51.41
Riau 51.47 15.52 55.30 22.42 61.41 25.12 58.35 28.30 69.72 19.77 71.24 28.25 81.43 32.75 73.60 36.63
Jambi 58.07 13.32 55.10 15.99 63.13 23.11 58.84 25.30 78.83 18.38 70.88 21.34 77.52 28.25 73.83 31.43
South Sumatera 47.74 14.42 55.33 20.11 58.65 23.99 59.52 18.02 63.64 19.40 71.36 25.03 78.11 29.82 81.79 22.65
Bengkulu 62.18 22.41 63.82 25.38 66.86 27.00 59.32 24.55 77.43 31.36 82.32 32.14 86.18 36.93 78.90 31.52
Lampung 57.65 23.78 51.85 23.42 58.50 23.24 47.54 25.79 69.06 31.15 66.37 32.14 79.11 30.53 62.45 31.16
Bangka Belitung 57.49 12.41 78.76 16.03
Jakarta 53.87 64.21 58.83 57.44 71.86 82.12 76.76 70.15
West Java 42.27 14.01 49.52 18.87 49.17 20.50 45.12 17.64 54.25 17.85 62.70 23.03 62.02 23.54 55.10 21.17
Central Java 46.28 24.19 50.45 26.09 50.62 29.17 48.98 29.31 58.25 29.98 62.60 31.69 64.58 36.33 63.87 35.78
DI Yogyakarta 58.05 49.79 61.81 50.67 64.40 54.81 63.23 50.67 80.39 63.85 78.45 64.29 79.27 70.02 82.62 63.53
East Java 49.74 22.69 56.07 25.32 58.64 26.86 53.80 26.73 63.30 29.19 70.82 31.09 73.95 33.85 69.17 33.53
Banten 58.06 15.72 70.98 19.70
Bali 62.57 34.82 64.52 40.25 62.92 45.15 61.31 38.00 77.70 46.28 81.17 46.88 80.15 56.12 75.90 47.81
West Nusa Tenggara 47.26 18.52 41.65 23.21 49.19 27.07 48.33 27.94 62.84 24.29 51.42 27.56 71.07 33.23 55.96 31.64
East Nusa Tenggara 53.86 8.40 58.32 10.49 59.85 9.97 62.19 10.33 88.66 13.44 82.24 16.59 86.63 14.91 85.21 15.90
East Timor 35.98 15.82 43.91 17.36 72.04 36.16 74.32 33.45
West Kalimantan 51.77 10.07 50.96 15.96 48.41 12.38 49.21 15.96 73.27 14.38 72.71 21.59 66.89 17.42 64.10 22.27
Central Kalimantan 61.74 18.33 54.74 15.32 62.90 20.32 54.01 18.95 77.67 21.48 70.42 21.42 78.53 26.60 72.98 25.44
South Kalimantan 50.03 15.46 52.80 18.67 50.48 19.97 44.89 18.05 70.04 19.28 64.83 23.93 62.51 24.94 53.40 23.36
East Kalimantan 56.37 20.70 59.80 24.32 57.10 19.77 56.09 29.06 72.26 25.62 78.26 33.86 80.52 32.72 75.60 41.55
North Sulawesi 50.05 24.82 50.33 31.22 52.85 34.13 56.58 34.59 65.55 34.19 69.47 38.50 66.76 43.05 76.97 43.07
Central Sulawesi 60.76 16.39 60.13 14.58 58.06 20.61 58.52 18.02 77.28 21.52 77.75 19.93 77.59 25.28 80.65 25.11
South Sulawesi 54.80 19.82 54.87 21.76 53.61 26.34 53.49 25.21 73.99 25.94 71.23 27.07 73.95 33.72 66.91 31.07
Southeast Sulawesi 63.71 23.02 61.19 25.31 66.62 27.03 65.48 27.14 82.45 29.76 77.89 34.65 81.76 35.63 80.98 33.41
Gorontolo 44.85 13.42 65.16 18.92
Maluku 65.79 21.25 73.42 24.54 73.85 43.84 90.09 28.35 91.87 33.13 98.20 51.80
Irian Jaya 54.91 12.61 60.65 15.09 58.48 14.82 79.55 37.39 82.57 19.62 83.36 22.00 83.71 20.08 98.46 49.85
North Maluku 73.48 44.64 93.19 50.22
INDONESIA 50.01 20.86 55.48 24.20 55.15 26.36 52.95 25.41 65.12 27.13 70.65 30.36 71.05 33.15 67.10 31.64
Source: SUSENAS, several years
Note: Missing values due to civil unrest or governmental changes

8
Table 8. Percent of Primary Students Enrolled, by Type of School

Primary School Students Enrolled Primary School Students Enrolled

Public School Private School Public Madrasah Private Madrasah
Province 1995 1998 2000 2002 1995 1998 2000 2002 1995 1998 2000 2002 1995 1998 2000 2002
Aceh 87.47 91.16 76.70 0.91 1.78 4.73 10.18 6.02 18.58 1.44 1.04 0.00
North Sumatera 86.25 86.39 85.40 87.22 11.21 11.85 13.55 11.50 0.97 0.91 0.57 0.94 1.58 0.85 0.48 0.33
West Sumatera 96.14 96.57 96.51 96.00 2.02 2.54 2.90 2.96 1.03 0.54 0.39 0.88 0.82 0.35 0.20 0.15
Riau 95.92 91.60 91.34 92.79 2.01 5.24 7.28 5.25 0.61 0.94 0.28 1.45 1.46 2.22 1.10 0.51
Jambi 97.30 95.56 96.64 96.09 1.57 2.13 1.91 1.99 0.97 1.20 0.96 1.36 0.16 1.10 0.48 0.57
South Sumatera 93.10 93.82 93.49 92.27 2.47 4.44 4.38 5.72 1.26 0.59 0.41 1.18 3.17 1.15 1.73 0.83
Bengkulu 96.19 98.20 97.26 96.23 0.39 1.00 1.78 1.29 1.00 0.63 0.81 2.20 2.42 0.17 0.15 0.28
Lampung 91.74 93.97 91.25 90.55 1.65 3.25 3.49 4.56 2.51 0.79 0.66 1.27 4.09 1.99 4.61 3.62
Bangka Belitung 91.54 4.35 3.92 0.19
Jakarta 79.13 78.16 79.49 80.69 13.11 17.09 17.54 16.31 2.04 0.99 0.65 1.27 5.72 3.76 2.32 1.73
West Java 91.40 90.65 92.38 91.61 2.22 3.79 3.09 3.03 1.99 1.04 0.83 1.32 4.39 4.52 3.70 4.03
Central Java 87.41 87.03 87.22 87.47 1.68 3.56 3.57 3.51 2.92 0.99 1.23 1.53 7.99 8.43 7.99 7.48
DI Yogyakarta 81.60 83.80 82.73 85.31 4.59 14.73 16.55 13.08 2.32 0.82 0.30 0.82 11.49 0.65 0.42 0.79
East Java 81.67 80.56 82.76 81.52 3.14 5.54 4.61 4.96 3.09 0.94 1.36 1.63 12.09 12.96 11.27 11.89
Banten 89.22 6.03 1.36 3.39
Bali 94.53 96.15 94.65 94.49 3.72 3.26 4.10 4.09 0.85 0.24 0.91 0.65 0.90 0.36 0.34 0.78
West Nusa Tenggara 91.89 92.96 91.72 95.53 0.30 1.14 0.96 1.33 1.87 0.55 0.98 0.90 5.94 5.35 6.35 2.24
East Nusa Tenggara 56.24 57.76 61.08 59.84 15.16 40.10 38.15 38.19 3.11 0.43 0.21 0.91 25.49 1.72 0.56 1.06
East Timor 89.34 85.94 3.39 13.40 2.90 0.27 4.37 0.39
West Kalimantan 93.12 89.68 90.95 89.83 3.91 5.25 6.39 6.34 1.05 0.64 0.58 1.06 1.91 4.43 2.08 2.76
Central Kalimantan 94.77 92.40 93.83 95.98 1.96 2.51 2.40 1.21 1.26 1.10 0.51 1.22 2.02 3.99 3.27 1.59
South Kalimantan 85.06 85.20 88.22 88.30 1.47 3.75 2.42 2.25 4.13 3.60 3.95 4.25 9.35 7.45 5.41 5.21
East Kalimantan 91.95 93.08 93.77 93.78 5.88 5.57 5.05 4.29 0.54 0.86 0.36 1.12 1.63 0.49 0.82 0.80
North Sulawesi 82.86 78.33 79.78 74.55 5.54 20.72 19.58 23.65 2.70 0.33 0.38 1.28 8.90 0.62 0.26 0.52
Central Sulawesi 95.14 94.84 96.82 94.84 2.35 4.39 2.38 3.83 0.70 0.57 0.49 0.87 1.81 0.20 0.32 0.46
South Sulawesi 95.15 95.23 95.09 96.17 1.61 2.52 2.22 1.82 1.91 0.94 0.82 0.73 1.33 1.32 1.87 1.28
Southeast Sulawesi 97.20 97.76 98.15 97.15 1.12 0.82 0.80 0.88 1.27 0.86 0.91 1.22 0.42 0.57 0.14 0.75
Gorontolo 95.77 1.09 1.51 1.63
Maluku 81.45 78.74 89.67 14.23 19.14 7.01 1.34 0.56 1.85 2.97 1.56 1.47
Irian Jaya 66.12 63.43 68.36 84.44 19.42 35.81 30.94 13.29 5.43 0.63 0.49 0.65 9.04 0.13 0.21 1.63
North Maluku 90.75 8.54 0.71 0.00
INDONESIA 87.73 87.38 88.23 88.43 3.91 6.59 6.30 5.81 2.34 1.04 0.90 1.37 6.02 5.00 4.56 4.39
Source: SUSENAS, several years
Note: Missing values due to civil unrest or governmental changes

9
Table 9. Percent of Junior Secondary Students Enrolled, by Type of School

Junior Secondary School Students Enrolled Junior Secondary School Students Enrolled
Public School Private School Public Madrasah Private Madrasah
Province 1995 1998 2000 2002 1995 1998 2000 2002 1995 1998 2000 2002 1995 1998 2000 2002
Aceh 80.59 89.21 89.22 4.03 3.94 0.90 11.14 6.04 8.98 4.25 0.81 0.90
North Sumatera 54.36 53.81 59.13 58.62 33.02 37.08 31.37 31.60 2.67 1.45 1.92 1.79 9.95 7.66 7.58 7.99
West Sumatera 75.40 78.62 80.17 79.51 4.26 5.13 4.69 3.81 13.26 11.84 10.88 12.21 7.07 4.42 4.26 4.47
Riau 72.35 68.76 67.97 74.99 9.25 15.24 18.32 12.10 7.88 5.11 4.26 3.81 10.52 10.90 9.44 9.10
Jambi 76.09 74.22 72.13 70.08 8.27 8.42 7.63 10.24 9.77 13.54 12.52 10.80 5.87 3.83 7.72 8.89
South Sumatera 63.57 62.92 69.07 71.56 21.99 28.88 21.76 20.50 5.09 2.33 3.03 3.60 9.34 5.86 6.15 4.34
Bengkulu 90.36 91.83 89.53 87.41 3.16 4.10 5.42 4.31 4.51 2.61 4.13 6.09 1.97 1.45 0.92 2.20
Lampung 50.34 49.65 52.33 60.29 29.69 35.30 30.59 26.62 6.56 4.07 3.70 3.26 13.40 10.97 13.39 9.84
Bangka Belitung 71.11 19.90 0.79 8.20
Jakarta 64.00 63.03 65.57 64.20 27.65 32.32 31.35 32.13 2.96 0.55 0.98 1.27 5.39 4.11 2.11 2.41
West Java 62.78 61.94 65.14 66.04 19.64 23.54 20.61 21.05 6.55 2.75 3.05 3.12 11.03 11.77 11.20 9.78
Central Java 62.30 62.11 65.15 63.85 14.74 21.74 19.29 19.47 7.01 3.32 3.49 3.58 15.95 12.83 12.08 13.10
DI Yogyakarta 51.50 63.02 69.04 77.32 22.82 30.98 26.31 20.15 7.54 4.44 4.22 1.75 18.14 1.55 0.44 0.78
East Java 54.93 54.52 60.13 60.57 20.30 25.87 20.57 19.04 7.20 4.38 5.33 5.01 17.57 15.23 13.97 15.37
Banten 58.14 24.05 3.25 14.57
Bali 75.32 74.82 79.74 78.20 21.34 23.61 19.17 21.02 0.87 1.45 1.02 0.62 2.47 0.11 0.07 0.16
West Nusa Tenggara 65.96 70.80 72.21 76.12 4.17 3.49 2.96 4.85 6.64 4.36 3.58 5.10 23.23 21.36 21.24 13.93
East Nusa Tenggara 53.57 63.84 63.76 65.97 21.61 34.91 34.24 31.54 7.95 0.77 1.10 1.51 16.88 0.48 0.90 0.98
East Timor 84.77 84.00 6.69 16.00 3.62 0.00 4.92 0.00
West Kalimantan 67.62 65.61 61.95 69.52 21.07 24.29 27.80 23.43 4.68 2.81 4.78 1.68 6.63 7.29 5.46 5.38
Central Kalimantan 81.22 71.61 82.87 85.51 8.42 10.70 8.08 5.04 7.60 7.31 3.59 3.08 2.77 10.37 5.46 6.37
South Kalimantan 52.12 53.11 58.22 59.85 7.83 8.66 6.37 4.49 18.55 20.96 21.21 20.42 21.51 17.27 14.20 15.25
East Kalimantan 68.97 70.99 74.19 80.75 18.99 19.67 17.04 14.03 4.26 3.33 3.05 1.54 7.77 6.01 5.72 3.68
North Sulawesi 81.39 78.49 81.80 82.46 7.97 18.85 16.04 16.54 4.32 1.20 1.05 0.48 6.32 1.46 1.11 0.52
Central Sulawesi 75.55 83.21 83.79 84.48 8.34 6.33 5.61 6.92 5.19 3.68 4.13 3.65 10.92 6.79 6.47 4.95
South Sulawesi 76.27 80.59 83.04 85.35 9.42 11.43 9.33 8.48 7.07 3.17 2.88 2.35 7.24 4.82 4.75 3.82
Southeast Sulawesi 84.46 88.49 90.63 88.91 4.97 2.02 3.80 2.26 5.67 3.63 3.44 5.28 4.90 5.87 2.12 3.55
Gorontolo 91.01 0.00 5.85 3.14
Maluku 77.64 77.47 93.27 14.79 15.53 5.88 5.01 2.47 0.85 2.56 4.53 0.00
Irian Jaya 83.07 82.63 86.20 94.27 7.32 16.32 12.43 5.73 3.95 0.33 1.01 0.00 5.66 0.72 0.36 0.00
North Maluku 92.39 5.95 1.67 0.00
INDONESIA 63.37 63.54 66.29 67.05 18.42 22.99 20.22 19.55 6.46 3.69 3.91 3.84 11.76 9.77 9.58 9.56
Source: SUSENAS, several years
Note: Missing values due to civil unrest or governmental changes

10
Table 10. Percent of Senior Secondary Students Enrolled, by Type of School

Senior Secondary Students Enrolled Senior Secondary Students Enrolled

Public School Private School Public Madrasah Private Madrasah
Province 1995 1998 2000 2002 1995 1998 2000 2002 1995 1998 2000 2002 1995 1998 2000 2002
Aceh 83.01 87.12 86.08 7.21 5.96 4.64 7.71 5.72 8.51 2.07 1.20 0.77
North Sumatera 42.39 45.99 48.95 45.58 47.38 46.43 44.26 46.88 2.16 1.67 1.87 1.80 8.06 5.90 4.92 5.74
West Sumatera 75.06 71.94 77.05 76.53 14.39 16.07 14.26 11.61 6.14 8.65 5.44 8.08 4.41 3.34 3.24 3.79
Riau 70.36 66.07 72.27 77.07 18.26 18.04 19.38 15.25 7.92 7.24 3.66 4.46 3.47 8.65 4.69 3.22
Jambi 70.78 70.63 70.78 62.47 15.39 15.55 13.96 20.15 10.54 7.99 9.55 9.63 3.29 5.84 5.71 7.75
South Sumatera 51.43 48.14 45.75 54.36 37.97 48.02 47.83 41.96 3.08 1.40 3.08 1.32 7.52 2.44 3.35 2.36
Bengkulu 78.46 81.05 81.98 81.73 13.34 14.57 11.14 12.35 3.58 3.34 6.43 5.92 4.62 1.05 0.45 0.00
Lampung 53.27 45.82 53.60 53.54 36.50 43.15 39.38 37.38 3.79 4.98 2.18 2.70 6.44 6.05 4.85 6.37
Bangka Belitung 53.01 37.88 1.99 7.12
Jakarta 52.18 47.17 45.58 48.58 41.33 50.66 52.14 48.06 1.93 0.71 0.47 1.05 4.57 1.46 1.80 2.30
West Java 52.75 51.56 56.70 55.75 38.78 38.83 36.75 34.44 2.70 3.33 2.26 3.77 5.77 6.28 4.29 6.04
Central Java 49.58 52.70 51.79 52.41 33.09 37.06 38.10 35.89 4.41 3.64 3.67 4.16 12.92 6.59 6.44 7.55
DI Yogyakarta 44.75 51.92 50.36 57.73 30.56 43.27 42.72 36.93 3.86 4.29 6.03 3.65 20.82 0.52 0.89 1.69
East Java 42.68 45.22 45.23 43.83 41.90 41.94 38.81 38.42 4.07 4.06 6.31 5.34 11.35 8.78 9.65 12.42
Banten 41.72 40.37 7.17 10.74
Bali 51.47 56.06 56.38 57.17 47.25 43.45 42.15 42.36 0.11 0.48 1.12 0.47 1.17 0.00 0.35 0.00
West Nusa Tenggara 68.21 61.34 59.73 65.30 8.91 13.62 13.44 12.96 7.96 6.92 9.52 9.22 14.92 18.12 17.31 12.52
East Nusa Tenggara 49.33 62.01 61.92 58.83 25.61 37.41 36.88 40.31 6.18 0.46 1.20 0.86 18.88 0.12 0.00 0.00
East Timor 81.30 80.68 12.18 19.17 1.79 0.00 4.73 0.15
West Kalimantan 58.85 59.29 56.61 56.40 36.05 36.07 36.53 36.12 1.94 2.13 2.34 3.12 3.16 2.51 4.52 4.36
Central Kalimantan 78.11 79.76 85.15 82.25 14.11 13.15 8.73 9.65 4.52 3.74 4.63 4.72 3.26 3.34 1.50 3.39
South Kalimantan 55.84 52.15 64.35 55.58 20.40 18.33 9.56 13.95 13.39 16.59 17.57 19.13 10.38 12.93 8.52 11.34
East Kalimantan 59.61 60.81 68.03 70.03 32.70 32.76 23.72 25.68 2.15 3.36 5.10 2.18 5.55 3.07 3.15 2.11
North Sulawesi 83.57 83.22 90.75 77.54 6.49 14.75 7.55 21.87 4.81 1.90 1.62 0.12 5.13 0.13 0.08 0.47
Central Sulawesi 80.21 82.56 86.16 84.60 11.00 10.48 5.70 6.99 5.36 2.78 3.66 2.82 3.44 4.18 4.48 5.59
South Sulawesi 71.07 76.85 75.22 79.45 21.06 16.66 19.11 14.44 4.05 3.60 2.54 3.75 3.82 2.88 3.13 2.36
Southeast Sulawesi 89.30 89.09 86.96 87.40 5.45 4.41 8.99 5.51 3.51 1.87 2.49 3.30 1.74 4.63 1.56 3.79
Gorontolo 78.96 0.47 10.96 9.60
Maluku 76.92 72.95 84.59 15.73 21.67 13.37 4.52 3.40 2.03 2.83 1.98 0.00
Irian Jaya 74.59 72.08 77.45 91.68 11.30 27.50 22.33 8.32 2.33 0.22 0.22 0.00 11.78 0.20 0.00 0.00
North Maluku 88.13 6.78 2.54 2.54
INDONESIA 54.67 55.45 56.38 55.96 33.65 35.84 34.85 33.58 3.79 3.48 3.64 4.11 7.90 5.23 5.13 6.35
Source: SUSENAS, several years
Note: Missing values due to civil unrest or governmental changes

11
Table 11. Adult Literacy Rates

1995 1998 2000 2002

Ages Ages Ages Ages Over Ages Ages Over Ages Ages Over
Province 15-24 25-54 Over 55 Overall 15-24 25-54 55 Overall 15-24 25-54 55 Overall 15-24 25-54 55 Overall
Aceh 97.70 89.56 64.74 89.03 98.54 92.86 71.58 91.97 99.79 98.47 84.05 97.34
North Sumatera 99.02 95.68 74.92 93.93 99.14 97.33 80.59 95.65 99.41 97.51 83.23 96.21 99.15 97.66 82.56 96.11
West Sumatera 98.18 93.10 74.14 91.27 98.84 95.48 80.86 93.81 98.93 96.86 83.19 94.99 98.77 96.55 84.67 95.15
Riau 97.54 92.31 72.75 92.11 99.00 95.89 81.21 95.36 99.33 96.45 81.34 95.80 99.07 96.79 85.42 96.56
Jambi 97.87 89.43 65.27 89.59 98.60 93.09 76.63 92.77 99.38 95.74 74.84 94.43 98.96 95.88 77.65 94.71
South Sumatera 97.92 91.75 65.14 90.42 98.53 94.59 72.93 93.06 98.49 95.61 76.46 93.98 98.85 95.69 75.40 94.11
Bengkulu 98.33 91.62 65.78 90.77 98.55 93.76 71.38 92.55 98.79 93.06 65.33 91.54 98.59 95.07 68.93 93.04
Lampung 98.55 90.97 56.27 89.07 99.09 93.52 59.18 90.51 99.05 93.67 62.25 90.91 98.91 94.99 70.81 93.00
Bangka Belitung 97.52 94.40 66.88 91.74
Jakarta 99.67 96.81 82.19 96.41 99.57 98.42 90.23 97.99 99.75 98.20 87.74 97.56 99.57 98.74 90.89 98.23
West Java 98.46 89.28 60.15 87.85 99.21 93.53 70.95 92.09 99.25 94.25 70.65 92.49 99.45 95.28 72.64 93.11
Central Java 98.33 84.37 43.41 80.23 98.87 89.09 51.19 84.23 99.04 90.34 53.26 85.63 99.17 91.19 51.33 85.66
DI Yogyakarta 99.06 87.21 41.63 80.37 99.05 90.18 41.74 81.17 98.50 90.82 41.69 80.51 99.36 92.84 48.13 83.81
East Java 96.78 79.02 39.36 75.75 97.40 84.63 48.24 80.78 97.97 86.17 47.90 81.74 98.46 87.83 49.80 83.19
Banten 98.81 94.73 73.53 93.84
Bali 97.45 81.49 36.90 78.31 98.22 87.59 47.49 83.33 98.49 88.93 49.36 84.23 97.65 89.29 50.44 84.19
West Nusa Tenggara 91.38 61.73 30.30 65.81 93.54 71.88 39.04 73.72 94.91 75.15 42.70 76.32 95.72 76.73 45.31 77.87
East Nusa Tenggara 93.54 77.70 42.11 76.90 95.11 84.08 48.45 81.57 95.25 85.76 50.39 82.83 95.86 88.04 51.04 84.13
East Timor 74.13 37.29 9.42 45.56 76.58 42.31 9.39 47.29
West Kalimantan 94.48 75.14 41.42 77.44 97.47 83.13 53.82 84.14 97.12 85.26 53.57 85.24 97.12 87.53 56.77 86.75
Central Kalimantan 98.64 93.98 74.18 93.48 98.98 95.61 80.83 95.11 98.97 96.19 81.17 95.68 99.47 97.33 79.99 96.32
South Kalimantan 97.91 90.26 66.05 89.77 98.47 93.90 71.13 92.45 98.98 93.37 71.77 92.21 98.47 94.65 73.77 93.29
East Kalimantan 98.31 91.18 62.60 90.92 99.10 93.18 69.80 92.87 98.99 94.58 68.93 93.73 99.23 96.17 74.78 95.19
North Sulawesi 98.07 97.03 90.00 96.37 98.95 98.07 93.37 97.64 99.00 98.57 94.65 98.10 99.40 99.02 96.96 98.79
Central Sulawesi 97.03 90.96 63.55 89.90 98.30 93.35 72.46 92.71 98.37 93.74 74.56 92.89 98.57 94.52 73.39 93.32
South Sulawesi 94.96 78.64 42.63 78.35 95.71 84.59 50.92 82.56 96.10 86.27 51.96 83.64 95.29 86.57 51.96 83.47
Southeast Sulawesi 96.53 83.17 44.29 83.01 97.34 88.12 55.29 87.35 98.03 89.81 56.81 88.76 96.99 90.31 54.36 88.24
Gorontolo 96.81 96.25 86.49 95.21
Maluku 97.52 94.60 75.73 93.13 98.84 95.94 80.53 94.74 99.30 99.62 99.48 99.50
Irian Jaya 85.07 65.45 53.14 70.24 82.85 67.31 60.89 71.47 80.13 66.59 61.37 70.11 100.00 98.81 87.00 97.93
North Maluku 99.80 97.13 93.73 97.74
INDONESIA 95.83 84.18 55.94 83.72 96.81 88.57 64.08 87.37 97.59 90.95 66.05 89.15 98.47 93.94 71.94 92.05
Source: SUSENAS, several years
Note: Missing values due to civil unrest or governmental changes

12
Table 12. Primary School Classrooms and Teacher Profiles

Classrooms Teachers Degree Held by Teachers

Number of Good Fair Poor Total SLTP SMU SMU non

Province classes condition condition condition Number Civil Non-Civil SLTP teaching teaching teaching DII DIII Above DIII
Jakarta 27,494 18,426 3,268 821 36,597 73.1% 26.9% 1.4% 2.9% 61.4% 2.2% 18.5% 5.1% 8.6%
West Java 207,618 58,370 63,698 43,204 190,633 90.8% 9.2% 0.8% 1.1% 63.2% 2.6% 26.6% 2.0% 3.8%
Central Java 163,506 72,779 59,164 20,554 194,261 92.6% 7.4% 1.5% 2.4% 72.4% 2.6% 15.8% 2.2% 3.1%
DI Yogyakarta 16,289 7,243 6,626 1,969 21,276 97.4% 2.6% 1.8% 2.0% 59.8% 0.1% 26.9% 4.8% 4.6%
East Java 172,542 81,319 56,568 22,021 210,017 82.1% 17.9% 3.6% 3.1% 58.5% 6.7% 13.2% 4.7% 10.3%
Aceh 25,972 11,741 7,330 3,608 28,832 96.1% 3.9% 0.8% 2.0% 75.2% 1.0% 16.8% 1.6% 2.7%
North Sumatera 69,864 30,566 22,491 8,926 80,176 90.7% 9.3% 1.4% 2.0% 87.8% 1.9% 3.4% 1.5% 2.1%
West Sumatera 29,183 11,696 10,263 3,628 31,852 96.8% 3.2% 0.5% 1.3% 73.4% 1.0% 20.3% 1.4% 2.1%
Riau 28,647 9,421 7,589 4,690 30,486 87.4% 12.6% 1.3% 1.5% 76.7% 4.6% 12.1% 1.2% 2.6%
Jambi 20,173 7,922 5,925 3,134 22,504 86.4% 13.6% 2.1% 1.3% 78.5% 1.3% 14.1% 1.1% 1.7%
South Sumatera 44,873 16,236 11,620 7,093 50,649 87.4% 12.6% 3.4% 3.0% 76.0% 3.8% 11.0% 1.0% 1.9%
Lampung 42,132 15,493 11,102 5,579 48,431 87.3% 12.7% 1.8% 3.3% 71.4% 3.1% 14.0% 2.1% 4.2%
West Kalimantan 27,157 7,070 8,419 5,076 29,055 95.9% 4.1% 1.2% 0.5% 86.4% 1.0% 8.1% 1.6% 1.3%
Central Kalimantan 11,941 3,531 3,085 3,499 13,315 93.2% 6.8% 0.7% 1.2% 80.4% 2.3% 13.1% 1.2% 1.1%
North Kalimantan 22,172 7,950 7,862 4,506 26,553 88.6% 11.4% 1.5% 1.6% 69.4% 3.4% 21.3% 0.9% 2.0%
East Kalimantan 16,608 5,836 4,881 2,558 19,129 95.4% 4.6% 0.7% 2.1% 76.0% 1.7% 13.6% 1.2% 4.8%
North Sulawesi 20,107 10,705 6,169 2,728 25,255 97.8% 2.2% 0.8% 0.6% 90.6% 0.3% 5.5% 0.7% 1.4%
Central Sulawesi 18,094 5,204 5,453 4,447 18,044 97.9% 2.1% 1.1% 0.4% 85.6% 0.9% 10.0% 0.4% 1.5%
South Sulawesi 53,964 22,464 15,772 7,908 59,117 98.2% 1.8% 0.7% 1.1% 78.6% 0.7% 10.8% 3.1% 5.0%
Southeast Sulawesi 12,482 3,965 3,854 2,714 13,605 99.4% 0.6% 0.6% 2.9% 81.0% 0.5% 12.4% 0.4% 2.2%
Maluku 17,067 5,181 4,155 4,642 16,152 96.4% 3.6% 0.5% 2.0% 84.7% 1.0% 10.4% 0.4% 0.8%
Bali 16,882 8,710 5,739 2,722 22,756 97.3% 2.7% 0.1% 2.5% 69.5% 0.4% 18.0% 1.4% 8.1%
West Nusa Tenggara 22,544 10,284 6,296 2,431 27,133 90.4% 9.6% 0.3% 1.6% 73.6% 4.6% 12.9% 2.6% 4.5%
East Nusa Tenggara 28,596 8,797 8,559 9,284 28,247 94.7% 5.3% 1.3% 5.3% 83.7% 0.7% 7.4% 1.1% 0.5%
Irian Jaya 15,915 6,708 3,113 2,835 16,649 95.7% 4.3% 0.9% 0.8% 93.7% 0.9% 2.0% 0.5% 1.2%
Bengkulu 10,339 3,873 3,387 1,713 12,362 97.6% 2.4% 0.7% 1.5% 74.9% 0.6% 19.6% 1.0% 1.7%
INDONESIA 1,142,161 451,490 352,388 182,290 1,280,798 90.36% 9.64% 1.60% 2.10% 71.71% 2.86% 15.04% 2.34% 4.36%
Source: 1999 MoNE School Survey
Sample Size: 172,457 schools

13
Table 13. Teacher Profile in Junior Secondary Schools

Years of Teacher Work Experience

Total Civil Non-Civil

Province Teachers Servants Servants Under 5 5-9 10 - 14 15 - 19 20 - 24 Over 25
Jakarta 2,413 3% 97% 11% 11% 17% 34% 19% 7%
West Java 7,613 5% 95% 24% 16% 23% 22% 8% 7%
Central Java 6,900 4% 96% 19% 10% 25% 26% 10% 10%
DI Yogyakarta 580 7% 93% 13% 7% 16% 30% 18% 17%
East Java 8,446 3% 97% 22% 12% 29% 24% 7% 6%
Aceh 1,249 2% 98% 14% 10% 25% 36% 12% 3%
North Sumatera 1,050 2% 98% 18% 13% 25% 28% 10% 6%
West Sumatera 582 1% 99% 9% 12% 30% 32% 11% 6%
Riau 776 4% 96% 21% 15% 24% 27% 10% 3%
Jambi 533 2% 98% 21% 13% 32% 23% 8% 3%
South Sumatera 2,284 2% 98% 27% 18% 25% 20% 7% 4%
Lampung 984 5% 95% 20% 20% 28% 20% 9% 2%
West Kalimantan 754 4% 96% 27% 12% 27% 24% 9% 2%
Central Kalimantan 57 2% 98% 48% 18% 23% 10% 1% 0%
North Kalimantan 147 6% 94% 15% 10% 28% 35% 8% 3%
East Kalimantan 252 13% 87% 26% 20% 33% 16% 3% 2%
North Sulawesi 318 25% 75% 16% 8% 23% 34% 14% 5%
Central Sulawesi 152 5% 95% 21% 19% 26% 25% 6% 2%
South Sulawesi 473 21% 79% 18% 14% 25% 27% 9% 7%
Southeast Sulawesi 50 16% 84% 21% 21% 22% 24% 9% 3%
Bali 330 4% 96% 12% 9% 23% 35% 15% 6%
West Nusa Tenggara 1,226 8% 92% 21% 21% 23% 25% 8% 3%
East Nusa Tenggara 570 4% 96% 26% 12% 23% 26% 12% 1%
Irian Jaya 287 16% 84% 25% 27% 28% 12% 5% 3%
Bengkulu 264 2% 98% 24% 22% 26% 21% 1% 2%
Source: 1999 MoNE School Survey
Sample size: 8793 public schools

14
Table 14. Teacher Profile in Senior Secondary Schools

Years of Teacher Work Experience

Total Civil Non-Civil
Province Teachers Servants Servants Under 5 5-9 10 - 14 15 - 19 20 - 24 Over 25
Jakarta 1,480 3% 97% 5% 15% 29% 27% 17% 7%
West Java 1,853 14% 86% 7% 22% 36% 23% 7% 6%
Central Java 2,829 6% 94% 9% 14% 36% 21% 13% 7%
DI Yogyakarta 523 10% 90% 24% 12% 22% 17% 13% 12%
East Java 3,341 4% 96% 6% 14% 40% 25% 10% 5%
Aceh 519 10% 90% 15% 17% 34% 22% 9% 4%
North Sumatera 571 10% 90% 14% 18% 29% 21% 12% 6%
West Sumatera 396 2% 98% 10% 18% 34% 23% 10% 4%
Riau 264 4% 96% 24% 24% 28% 15% 6% 3%
Jambi 209 3% 97% 58% 13% 15% 9% 4% 1%
South Sumatera 826 4% 96% 34% 22% 25% 11% 5% 3%
Lampung 225 11% 89% 40% 25% 22% 8% 4% 1%
West Kalimantan 201 12% 88% 53% 15% 19% 6% 4% 2%
Central Kalimantan 6 0% 100% 96% 2% 2% 0% 0% 0%
North Kalimantan 136 22% 78% 62% 9% 17% 7% 4% 2%
East Kalimantan 139 8% 92% 59% 19% 13% 7% 2% 0%
North Sulawesi 160 11% 89% 27% 17% 29% 13% 8% 5%
Central Sulawesi 26 4% 96% 47% 18% 21% 9% 3% 2%
South Sulawesi 171 19% 81% 11% 18% 39% 18% 9% 6%
Bali 168 7% 93% 22% 13% 31% 17% 10% 7%
West Nusa Tenggara 472 9% 91% 35% 27% 22% 9% 5% 2%
East Nusa Tenggara 171 10% 90% 50% 17% 19% 10% 3% 1%
Irian Jaya 86 9% 91% 67% 20% 9% 2% 1% 1%
Bengkulu 76 9% 91% 55% 18% 17% 7% 2% 0%
Source: 1999 MoNE School Survey
Sample size: 2385 public schools

15
Table 15. Test Scores of Junior Secondary Students

MATH LANGUAGE TOTAL SCORE

25th 75th 25th 75th 25th 75th

Province Total Students percentile percentile Mean percentile percentile Mean percentile percentile Mean
Jakarta 135,221 4.37 5.13 4.87 4.8 5.77 5.30 27.84 32.6 30.57
West Java 446,250 4.48 4.93 4.77 4.72 5.28 5.01 28.15 30.8 29.67
Central Java 484,636 4.5 5.02 4.83 4.96 5.72 5.34 28.76 32.01 30.58
DI Yogyakarta 48,346 4.49 5.255 4.94 4.93 5.73 5.33 28.945 33.1 31.23
East Java 465,770 4.53 4.97 4.82 4.8 5.45 5.14 28.34 31.2 30.00
Aceh 62,888 4.78 5.18 5.01 5.58 6.09 5.85 31.78 34.09 33.02
North Sumatera 217,434 4.46 4.89 4.71 4.31 4.81 4.58 27.01 29.75 28.50
West Sumatera 75,150 4.42 4.87 4.68 4.76 5.44 5.09 28.39 31.18 29.89
Riau 68,585 4.55 4.96 4.79 4.59 5.17 4.88 27.98 30.545 29.33
Jambi 34,377 4.42 4.83 4.58 4.35 4.95 4.57 26.98 29.84 27.96
South Sumatera 98,558 4.47 4.91 4.62 4.4 4.99 4.60 27.25 29.84 27.89
Lampung 110,017 4.37 4.68 4.57 4.45 4.91 4.70 27.12 29.11 28.27
West Kalimantan 45,637 4.43 4.7 4.60 4.44 5.03 4.74 27.25 29.49 28.45
Central Kalimantan 19,783 4.36 4.92 4.64 4.59 5.07 4.81 27.645 30.16 28.76
North Kalimantan 35,296 4.66 4.94 4.82 4.65 5.12 4.88 28.17 30.3 29.25
East Kalimantan 36,303 4.53 4.9 4.72 5.05 5.52 5.28 29.01 31.28 30.05
North Sulawesi 25,116 4.53 5.32 4.89 4.51 5.09 4.78 28.4 31.73 29.85
Central Sulawesi 26,058 4.5 5.1 4.81 4.47 5.06 4.74 27.76 30.73 29.13
South Sulawesi 103,330 4.51 5.45 5.02 4.55 5.25 4.91 28.27 32.27 30.32
Southeast Sulawesi 29,119 2.7 4.02 3.46 4.06 4.94 4.49 23.12 28.48 25.69
Maluku
Bali 43,478 4.62 5.12 4.89 4.74 5.5 5.09 28.29 31.94 30.14
West Nusa Tenggara 8,306 2.47 3.98 3.22 3.67 5.04 4.48 20.99 27.21 24.77
East Nusa Tenggara 43,943 2.93 4.47 3.87 4.35 5.07 4.70 24.5 28.54 26.47
Irian Jaya
Bengkulu 4.55 4.87 4.72 4.45 5.11 4.76 27.345 29.835 28.57
North Maluku 11,123 3.29 4.86 4.11 4.32 5.44 4.89 25.2 30.72 27.98
Gorontalo 7,896 4.62 5.08 4.86 4.4 4.98 4.67 27.41 30.31 28.93
Banten 107,108 4.27 4.64 4.54 4.37 4.94 4.71 26.67 29.01 28.24
Bangka Belitung 12,795 4.58 5.07 4.84 4.79 5.53 5.15 28.19 31.79 29.85
INDONESIA 2,802,523 4.65 4.90 4.70 4.69 5.26 4.99 28.54 30.50 29.44
Source: EBTANAS 2001/2002 school year
Note: Individual Subjects scores out of a possible 10; total scores out of a possible 60 points; missing figures due to lack of reporting
Sample Size: 2,802,523 students

16
Table 16. Test Scores of Senior Secondary Students

Natural Sciences Track Language Track Social Sciences Track

Low High Average # of Low High Average # of Low High Average

Province # of students score score score students score score score students score score score
Jakarta 28,399 24.03 41.61 31.93 1,324 23.04 39.58 31.68 52,642 18.93 36.27 27.46
West Java 57,720 20.51 37.34 27.75 4,021 21.27 36.23 29.13 91,417 16.50 33.05 24.34
Central Java 54,530 24.35 41.17 31.51 4,021 24.23 39.24 31.87 96,588 19.26 36.40 27.48
DI Yogyakarta 10,112 22.46 38.23 29.21 15,904 18.43 34.74 26.37
East Java 64,066 30.70 5,656 30.86 106,301 24.90
Aceh 15,839 29.13 41.57 34.90 14,476 24.65 35.13 29.46
North Sumatera 44,162 21.87 37.61 28.56 515 19.70 35.48 27.55 49,782 19.96 35.89 27.23
West Sumatera 10,828 21.42 36.53 26.66 1,020 21.06 36.36 28.30 23,706 17.15 32.76 23.54
Riau 7,394 21.30 37.39 28.26 529 19.17 36.65 27.89 19,760 16.89 32.41 23.85
Jambi 4,082 20.61 33.79 26.31 505 17.52 31.81 23.85 10,298 14.80 28.36 20.92
South Sumatera 13,997 19.96 34.53 26.41 99 23.55 38.11 30.53 29,256 14.52 28.09 20.78
Lampung 10,982 18.87 34.43 25.22 221 18.06 37.06 27.49 23,065 14.74 30.51 21.65
West Kalimantan 3,929 20.46 37.42 27.38 347 19.70 34.58 26.14 13,183 15.69 32.02 22.84
Central Kalimantan 2,719 19.41 33.02 25.31 391 18.43 33.80 25.67 5,299 14.72 28.19 20.65
North Kalimantan 3,675 29.36 1,663 17.67 34.78 25.63 9,479 16.17 32.78 23.69
East Kalimantan 5,371 20.87 34.89 26.80 238 19.69 33.55 26.70 9,171 16.12 30.27 22.39
North Sulawesi 4,390 21.34 32.99 26.88 1,782 18.04 31.32 24.35 6,392 17.04 29.34 22.88
Central Sulawesi 3,420 24.09 35.37 29.07 807 19.41 35.02 26.19 7,131 17.51 29.60 22.94
South Sulawesi 19,349 31.83 2,214 20.88 32.99 26.81 25,087 18.23 31.43 24.66
Southeast Sulawesi 38,924 21.43 34.07 28.21 7,095 19.02 33.58 25.89 62,559 16.63 30.27 22.87
Bali 6,884 24.61 39.95 31.70 4,942 21.47 37.28 29.37 10,433 17.67 33.90 25.39
West Nusa Tenggara 6,838 18.57 33.72 24.87 3,534 17.00 32.06 23.89 15,715 13.91 29.90 20.74
East Nusa Tenggara 3,430 17.07 26.15 21.03 2,420 15.76 27.15 20.99 11,659 13.57 24.87 18.45
Bengkulu 26.82 26.11 24.07
North Maluku 2,304 23.10 43.26 29.59 350 19.85 33.34 25.51 3,396 18.81 37.33 24.87
Gorontalo 974 23.02 34.66 28.26 470 18.21 30.60 24.32 1,901 17.39 31.42 23.81
Banten 20,430 21.28 35.55 27.04 11,716 18.45 32.09 25.03 43,104 16.27 31.48 22.89
Bangka Belitung 1,594 22.73 39.22 29.98 3,841 17.93 32.57 24.74
INDONESIA 446,342 17.07 43.26 28.27 55,880 17.5 39.58 26.87 761,545 13.57 37.33 23.78
Source: EBTANAS 2001/2002 school year
Note: Total Scores out of a possible 60 points,
Missing figures due to lack of reporting
Sample Size: 1,263,767 students

17
Table 17. Average Monthly Household Income
(Rupiah)

1995 1998 2000 2002

Province Urban Rural Urban Rural Urban Rural Urban Rural
Aceh 307,000 186,000 424,000 278,000 1,161,000
North Sumatera 299,000 185,000 422,000 286,000 701,000 466,000 1,049,000 634,000
West Sumatera 311,000 203,000 460,000 297,000 768,000 546,000 1,081,000 707,000
Riau 346,000 236,000 583,000 349,000 961,000 584,000 1,395,000 781,000
Jambi 290,000 189,000 444,000 267,000 654,000 449,000 868,000 592,000
South Sumatera 288,000 177,000 370,000 245,000 691,000 440,000 984,000 506,000
Bengkulu 267,000 180,000 394,000 251,000 636,000 445,000 863,000 553,000
Lampung 276,000 170,000 401,000 213,000 599,000 382,000 793,000 521,000
Bangka Belitung 968,000 766,000
Jakarta 456,000 738,000 1,050,000 1,998,000
West Java 323,000 185,000 445,000 269,000 656,000 414,000 970,000 537,000
Central Java 218,000 142,000 315,000 213,000 507,000 358,000 756,000 505,000
DI Yogyakarta 239,000 156,000 361,000 248,000 508,000 360,000 922,000 555,000
East Java 269,000 142,000 350,000 204,000 520,000 340,000 798,000 494,000
Banten 1,272,000 635,000
Bali 310,000 218,000 484,000 316,000 768,000 582,000 1,244,000 812,000
West Nusa Tenggara 205,000 145,000 323,000 213,000 493,000 397,000 677,000 497,000
East Nusa Tenggara 295,000 145,000 392,000 215,000 703,000 373,000 889,000 462,000
East Timor 267,000 163,000 393,000 212,000
West Kalimantan 360,000 211,000 527,000 281,000 878,000 480,000 1,219,000 621,000
Central Kalimantan 313,000 210,000 458,000 317,000 708,000 510,000 944,000 698,000
South Kalimantan 300,000 174,282 444,000 278,000 705,000 441,000 973,000 610,000
East Kalimantan 390,000 227,000 537,000 337,000 803,000 512,000 1,231,000 758,000
North Sulawesi 251,000 163,000 366,000 240,000 632,000 418,000 954,000 646,000
Central Sulawesi 303,000 177,000 442,000 233,000 716,000 445,000 977,000 588,000
South Sulawesi 275,000 161,000 402,000 247,000 698,000 434,000 950,000 564,000
Southeast Sulawesi 305,000 158,000 315,000 251,000 679,000 435,000 948,000 590,000
Gorontolo 659,000 409,000
Maluku 309,000 170,000 424,000 243,000 1,103,000 754,000
Irian Jaya 364,000 151,000 504,000 231,000 733,000 314,000 1,076,000 1,116,000
North Maluku 1,104,000 721,000
INDONESIA 308,000 167,000 441,000 243,000 666,000 405,000 1,043,000 554,000
Source: SUSENAS, several years
Notes: Figures rounded to nearest thousand
Missing values due to civil unrest or governmental changes (as several provinces developed post 1999)
Sample size for all household SUSENAS data: 1995 - 201,421 households; 1998 - 207,645; 2000 – 189,339; 2002 – 212,646

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Table 18. Education Expenditure as a Proportion of Total Household Expenditure

1995 1998 2000 2002

Province Mean Std dev Mean Std dev Mean Std dev Mean Std dev
Aceh 3.79 9.39 2.57 5.09 4.08 12.61
North Sumatera 4.37 9.23 3.46 7.48 2.82 7.08 2.24 4.96
West Sumatera 3.61 7.54 3.29 8.42 2.59 8.05 2.11 6.53
Riau 2.28 6.46 2.63 5.36 2.08 4.96 2.00 5.74
Jambi 2.81 8.07 2.37 5.36 2.00 6.89 1.51 4.71
South Sumatera 3.08 6.46 2.64 6.05 2.70 9.26 1.98 6.46
Bengkulu 2.98 6.48 2.99 8.88 2.52 7.82 2.04 6.61
Lampung 4.18 11.49 2.54 6.15 1.97 5.54 1.61 3.67
Bangka Belitung 1.31 2.84
Jakarta 6.17 13.60 7.34 18.57 4.86 10.87 2.91 5.52
West Java 3.99 9.48 3.41 9.42 2.43 6.66 1.80 5.25
Central Java 3.53 7.28 3.33 7.47 2.53 6.07 2.32 6.59
DI Yogyakarta 8.15 16.24 7.32 15.48 8.50 23.52 4.99 14.10
East Java 3.16 7.48 2.94 7.06 2.41 5.78 2.01 5.08
Banten 1.74 3.76
Bali 3.35 9.22 2.98 6.31 2.17 4.91 1.90 5.87
West Nusa Tenggara 2.58 5.76 1.67 4.17 1.68 4.80 1.12 3.17
East Nusa Tenggara 2.79 7.37 2.25 7.41 1.43 4.18 1.48 4.99
East Timor 1.53 3.73 1.40 3.29
West Kalimantan 2.20 4.92 1.97 4.70 1.86 4.91 1.31 4.19
Central Kalimantan 2.21 5.66 1.78 4.71 1.23 3.43 1.24 3.78
South Kalimantan 3.01 6.82 2.07 9.15 1.51 5.18 1.09 3.23
East Kalimantan 2.87 5.77 2.96 6.12 2.22 4.99 2.38 6.78
North Sulawesi 2.32 5.83 2.19 7.97 1.38 4.44 1.83 5.71
Central Sulawesi 2.43 7.78 2.35 5.21 1.61 5.96 1.16 4.72
South Sulawesi 3.38 8.70 2.56 6.20 1.79 6.34 1.72 4.76
Southeast Sulawesi 2.53 7.20 1.94 6.26 1.57 4.98 1.52 7.23
Gorontolo 0.99 2.30
Maluku 2.57 5.09 2.51 4.62 2.32 5.83
Irian Jaya 1.83 5.06 1.64 3.82 1.24 3.47 2.27 6.40
North Maluku 3.70 12.33
INDONESIA 3.25 7.71 2.85 7.06 2.38 6.67 2.02 5.86
Source: SUSENAS, several years
Note: Missing values due to civil unrest or governmental changes

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Table 19. National Education Development Expenditure, 2001

Total Development
Province Expenditure Rp ('000,000) % of total
North Maluku 16,500 0.23%
Maluku 37,500 0.51%
East Kalimantan 47,000 0.64%
Bali 49,200 0.67%
Bengkulu 51,600 0.71%
Jambi 52,700 0.72%
West Nusa Tenggara 54,700 0.75%
Irian Jaya 59,900 0.82%
West Kalimantan 60,300 0.82%
East Nusa Tenggara 63,200 0.86%
Southeast Sulawesi 64,000 0.88%
Riau 76,600 1.05%
Lampung 80,100 1.10%
Central Sulawesi 89,300 1.22%
West Sumatera 95,200 1.30%
North Sulawesi 104,000 1.42%
South Sumatera 108,000 1.48%
DI Yogyakarta 127,000 1.74%
Aceh 136,000 1.86%
South Sulawesi 142,000 1.94%
Central Kalimantan 146,000 2.00%
North Sumatera 153,000 2.09%
Central Java 188,000 2.57%
North Kalimantan 192,000 2.63%
East Java 253,000 3.46%
West Java 442,000 6.05%
Jakarta 4,420,000 60.47%
INDONESIA 7,310,000 100%
Source: 2001 APBN

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Table 20. Gross Regional Domestic Product at Current Market Prices, 1998-2000

1998 2000
GRDP GRDP per GRDP (Billion GRDP per
Province (Billion Rps) capita (Rp) % of total Rps) capita (Rp) % of total
Aceh 24,957 6,348,920 2.81% 28,626 7,282,293 2.45%
North Sumatera 50,706 4,352,575 5.70% 68,212 5,855,281 5.85%
West Sumatera 17,643 4,152,339 1.98% 22,368 5,264,383 1.92%
Riau 17,643 3,558,759 1.98% 55,430 11,180,752 4.75%
Jambi 42,838 17,746,783 4.82% 55,430 22,963,354 4.75%
South Sumatera 6,859 994,105 0.77% 9,061 1,313,250 0.78%
Bengkulu 33,072 21,099,480 3.72% 45,669 29,136,192 3.92%
Lampung 18,482 2,741,551 2.08% 23,253 3,449,264 1.99%
Jakarta 138,564 16,516,472 15.58% 188,036 22,413,407 16.12%
West Java 142,764 3,995,686 16.05% 181,630 5,083,469 15.57%
Central Java 84,610 2,709,346 9.51% 118,405 3,791,515 10.15%
DI Yogyakarta 9,864 3,159,242 1.11% 12,965 4,152,430 1.11%
East Java 135,753 3,902,783 15.26% 177,274 5,096,476 15.20%
Bali 13,526 4,292,385 1.52% 16,510 5,239,337 1.42%
West Nusa Tenggara 7,549 1,882,891 0.85% 11,937 2,977,357 1.02%
East Nusa Tenggara 4,868 1,231,694 0.55% 6,329 1,601,355 0.54%
West Kalimantan 14,635 3,627,735 1.65% 17,863 4,427,894 1.53%
Central Kalimantan 8,610 4,636,511 0.97% 10,871 5,854,066 0.93%
South Kalimantan 12,245 4,101,848 1.38% 17,688 5,925,152 1.52%
East Kalimantan 51,505 20,978,608 5.79% 72,178 29,398,970 6.19%
North Sulawesi 9,449 4,696,093 1.06% 11,762 5,845,640 1.01%
Central Sulawesi 6,630 2,988,593 0.75% 8,240 3,714,330 0.71%
South Sulawesi 21,951 2,723,575 2.47% 26,596 3,299,905 2.28%
Southeast Sulawesi 4,377 2,403,250 0.49% 5,730 3,146,132 0.49%
Maluku 5,226 4,334,990 0.59% 4,531 3,758,485 0.39%
Irian Jaya 19,053 8,578,823 2.14% 20,714 9,326,707 1.78%
INDONESIA 955,753 4,633,626 100% 1,290,684 6,257,419 100%
Source: Indonesian Bureau of Statistics, www.bps.go.id
Note: Discrepancies due to rounding

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Table 21. Per Capita Provincial Revenues, 2001

Share non-tax
Own source from natural DAU 2001 +
Province revenue resources Share tax contingency
Aceh 23,000 276,000 28,000 538,000
North Sumatera 31,000 6,000 27,000 299,000
West Sumatera 31,000 8,000 20,000 442,000
Riau 66,000 863,000 88,000 479,000
Jambi 33,000 32,000 33,000 451,000
South Sumatera 22,000 97,000 24,000 247,000
Bengkulu 22,000 8,000 19,000 494,000
Lampung 14,000 32,000 13,000 272,000
Bangka Belitung 34,000 25,000 33,000 351,000
Jakarta 202,000 11,000 289,000 92,000
West Java 29,000 8,000 22,000 179,000
Central Java 27,000 2,000 12,000 266,000
DI Yogyakarta 45,000 1,000 20,000 366,000
East Java 31,000 5,000 21,000 265,000
Banten 38,000 1,000 33,000 158,000
Bali 215,000 2,000 33,000 426,000
West Nusa Tenggara 22,000 16,000 16,000 344,000
East Nusa Tenggara 14,000 3,000 14,000 577,000
West Kalimantan 23,000 10,000 21,000 421,000
Central Kalimantan 33,000 102,000 52,000 589,000
South Kalimantan 40,000 72,000 38,000 399,000
East Kalimantan 67,000 1,657,000 136,000 761,000
North Sulawesi 35,000 7,000 19,000 486,000
Central Sulawesi 38,000 11,000 18,000 549,000
South Sulawesi 31,000 9,000 23,000 377,000
Southeast Sulawesi 22,000 7,000 14,000 535,000
Gorontolo 20,000 6,000 14,000 448,000
Maluku 25,000 14,000 24,000 662,000
Irian Jaya 31,000 130,000 107,000 1,315,000
North Maluku 8,000 48,000 24,000 632,000
Source: MOF Budget Department, SIKD, and Staff Estimates
Hofman, Bert, Kai Kaiser, and Soraya Goga. 2003. Decentralizing Indonesia. The World Bank, Jakarta.
Note: Figures rounded to nearest 1,000

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