The initial aim of the school grants program in Indonesia (known as the School Operational Assistance/BOS Program) was to compensate the burden carried by the community, especially the poor, for the costs of education (elementary and junior high school) following the government’s decision to reduce fuel subsidies in 2005. This study is part of a regional research program on school grants, which includes field research in four countries in Southeast Asia, East Asia, and the Asia-Pacific, namely Indonesia, Timor-Leste, Mongolia, and Vanuatu. The field study in Indonesia was carried out from April–September 2013 in 14 schools in 4 kabupaten (districts) in 4 provinces: Kabupaten Lebak in Banten Province, Kabupaten Agam in West Sumatra Province, Kabupaten Polewali Mandar (Polman) in West Sulawesi Province, and Kabupaten Jayapura in Papua Province. The study aims to examine the use and usefulness of BOS funds at the school level. In schools, interviews were conducted with the school head teachers, BOS treasurers, and the school committees. Group discussions were conducted with the teachers, students’ parents, and students. At the kabupaten education agencies, the team conducted interviews with the BOS managers, the heads of the elementary and junior high school education section, as well as the school superintendents. The study finds that the BOS Program is able to contribute to the improvement of education quality. The BOS funds also had effects on the improvement of the teachers’ motivation and management of school administration. In contrast, most informants assessed that the BOS funds were still unable to narrow the gap between schools located in urban areas and in rural or remote areas. The study also reveals some challenges in the implementation of the BOS Program, including low rates of parental participation in schools, delay in BOS fund disbursement, weak supervision, and limited amount of funds per student.