General Senior Secondary Education Financing in Indonesia

Edy Priyono, Vita Febriany
Research Report, September, 2013, Final



This report examines the policy options and financial implications of the expansion of senior secondary education in Indonesia. The government wishes to increase the gross enrolment rate from 70% to 85% by 2014 and aims for universal 12-year education by 2019. The approach adopted has been to: analyse current costs and funding arrangements through fieldwork and a review of secondary sources; consider the financing implications of achieving a set of minimum standards; review the current government funding provision; and examine a range of policy options for the expansion of senior secondary enrolments.

The current funding of government senior secondary education is complex and varies throughout the country. It involves different levels of government providing financial support for infrastructure, salaries and operational costs. A common feature of the senior secondary sub-sector is its dependence on parental contributions. This has implications for school quality and for equity. The government’s policy of designating some schools as ‘international standard secondary schools’ (RSBI) has inadvertently adversely affected equity.

The study found considerable variation in the levels of cost and the amounts of available revenue among state senior secondary schools (SMA), with the RSBI being far better resourced than the rest. Salaries of government service teachers (PNS) are the responsibility of government. Those of teachers without PNS status, who are numerous in some schools, have to be paid for from other sources and almost invariably these costs fall on parents. The burden on parents comes in various forms. There are direct charges for fees and registration books and uniforms and there are indirect costs of transport and meals. There are also high opportunity costs of sending children to senior secondary school to set against the perceived returns of this level of schooling.

As there are no agreed minimum service standards for SMA, the study constructed a set of standards based on those adopted for primary and junior secondary schools, adapted them in the light of discussions in the field and assessed sample schools against these standards. There were a number of areas in which schools fell short of the standards, particularly in the provision of textbooks and the certification of teachers. The study then considered the financial implications for schools of meeting them.

In seeking a more rational funding arrangement for senior secondary education, a number of important policy issues were raised. These concern the relative responsibilities of different levels of government for senior secondary education and the nature and magnitude of parental contributions. These issues need to be addressed in the knowledge that Government finances are limited and that decisions need to be made on the “desired” level of user charges, because the private returns to this level of education are high. Such decisions will have implications for social policy and the government’s stated intention of extending access to all. It also raises questions about the efficacy of efforts to reduce the cost burden for poor families through selective government subsidies and other pro-poor schemes.

The report outlines the efforts the various levels of government are making to support an expansion of senior secondary education. The central government is supporting investment in school building and subsidising operational costs through BOMM (grant assistance for quality and management) and an extension of per-capita school grants (BOS). It also promotes participation of poor students through scholarships (BKMM). District governments have introduced schemes to provide revenue to schools and reduce the burden of school fees. Some are also increasing enrolments through innovative school structures, such as the filial schools in Grobogan and Karawang.

Various policy options are explored for increasing participation in senior secondary schools and examples from international experience are provided. These options cover the need for greater supply of places, both for the currently projected rise in the number of children graduating from junior secondary schools and for an extra 260,000 children who will need to be enrolled if the 85% target is to be reached in the next two years. Reliance on school building to meet the challenge will not be sufficient, because of the very high costs involved and the limited time available. Other approaches are examined. These include structural innovations, such as the grouping of schools to reap economies of scale and overcome geographical obstacles. The filial schools model is one such example, but there are also other models in operation in other countries. These include the use of distance learning and the application of new technology. Increased efficiency, particularly in the major cost item, the use of teachers, would be a source of major savings which would free up resources for expansion. In order to reap efficiency gains the government needs to look critically at student-teacher ratios, which are very low, and teachers’ time on task. Teacher absenteeism and the practice of having several jobs mean that unit costs are much higher than they need to be.

A further option for managing the expansion of enrolments lies in promoting closer partnerships with the private sector. There are precedents for this in Indonesia and examples of sucessful collaboration in the international experience. Possible interventions include government financial support and the provision of teachers to private schools.

While the focus of attention is on increasing access, it is equally important to consider ways in which the quality and relevance of senior secondary education can be enhanced. Perceptions of quality and relevance are in any case powerful determinants of demand.

Options for increasing demand, particularly among lower income groups, are explored. This is a process that will become harder as the enrolment rate rises and the target population includes increasingly poor and remote populations. Interventions include various forms of cash transfers and scholarships and there are international models from which valuable lessons can be learned. Critical to the success of such schemes is the accuracy of the targeting.

The next steps beyond this report will be to construct financial scenarios, in order to model the various options, their consequences and their costs. Simulation models are available that will list the variables and show the the effects of changing the inputs. No one policy or intervention will be sufficient to reach the objective of increased access. The prefered mix of policies and programmes will be determined by political and macro-economic factors beyond the scope of this exercise. However, the proposed financial models will help to inform decision making by demonstrating the likely effects of various policy measures.

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