FINANCING FOR EQUITY
1. Overall Education Financing Mechanisms
2. Policies and Programmes to Provide Resources to Schools
3. Education Policies and Programmes to Provide Resources to Sudents and Families
4. Social Policies and Programmes to Provide Resources to Students and their Families
The Law on National Education (No.20/2003) and the Constitution Amendment III emphasise that all Indonesian citizens have the right to education; and that the government has an obligation to finance basic education without charging fees. Constitutionally, since 2009 the government has committed itself to spending at least 20% of its central and local government budgets.
Although there are no tuition fees at primary and secondary education levels, students pay other types of fees, including textbooks, school committee fees, registration and exam fees.
There are waivers for students from disadvantaged backgrounds. ECE is not free, however, according to the Presidential Decree Number 60 about Holistic and Integrative Early Childhood Development launched in 2013, the Government of Indonesia has the objective to provide all families with the right to subsidized ECE services, reducing disparities and giving opportunities to poor and marginalized children access to free education.
Two ministries are responsible for managing the education system, with 84% of schools under the Ministry of Education and Culture (MOEC) and the remaining 16% under the Ministry of Religious Affairs (MORA).
Most of the national educational budget is allocated to providing basic education. The education budget is split between the Ministry of Education and Culture (66%), the Ministry of Religious Affairs (28%), with the remaining 6% being distributed to other ministries (Table). MOEC transfers the majority of their budget (60%) to sub-national governments whereas MORA centrally manages its fund allocations directly with schools, the majority of which are private. The main transfer from MOEC to sub-national governments is the General Allocation Fund (Dana Alokasi Umum, DAU), transfers funding primarily for paying teacher salaries and allowances, and this consumes 79% of the sub-national level expenditure. DAU is allocated through a two-part formula consisting of the “Basic Allocation” (a portion of the sub-national budget for public servant salaries) and the “Fiscal Gap” (the difference between the estimated fiscal needs and fiscal capacity) aiming to equalize the fiscal capacities of sub-national governments. Fiscal needs are based on regional variables such as population, area, GDP per capita, and the human development index. Fiscal capacity is measured by a region’s own-source revenue and a fraction of total revenue-sharing. The school operational assistance grant (bantuan operasional sekolah, or BOS) is allocated to schools on a per student basis, via the provincial offices1.
The bantuan operasional sekolah (BOS) pays all children enrolled in basic education schools, private or public, under both MOEC and MORA and transfers funds directly into schools. It was rolled out to reduce household spending on basic education. The school block grants are based on a per-pupil formula, which provides incentives for headmasters and teachers to focus on maintaining and increasing enrolment. The BOS grant is meant to cover the non-salary development costs of a child in school. Schools use the funds to manage operational issues. In2014, the BOS amount was IDR580,000 (US$48) per year for elementary school students and IDR710,000 (US$61) per year for junior high school students.
There is no publicly available information on this topic.
Education Law 20/2003 serving as the legal basis for Indonesia’s National Education System explicitly obligates the Government to provide scholarships in order to ensure an equal-opportunity 9-year compulsory basic education for all citizens. Article 12:1c and 12:1d of the Law state that every student in every school has the right to receive financing support including scholarships for those that are performing well academically and from poor family background, and whose parents cannot afford the cost of schooling.
The Bantuan Siswa Miskin (BSM) scholarship program provides cash transfers directly to public school students from poor households or schools they attend. The funds are intended for use on education fees and other non-fee costs of attending school, such as transportation to school and uniforms. In 2012, the amount of the BSM transfers rises with the level of education, from IDR 360,000 (US$25.4) for primary school to approximately IDR 1.2 million (US$85) per year for a university student. In 2010, IDR 3.6 trillion (around US$ 397 million) was spent on the BSM program, equivalent to 4 percent of central government education expenditures.
PKH (program keluarga harapan) or family hope programme focuses both on health and education. The conditional cash transfer program (PKH) is intended for use on education fees and other non-fee costs of attending school. PKH is conditional on primary and junior secondary school enrolment and attendance for a minimum of 85 percent of school days for children aged 6-15, and senior secondary school enrolment for children aged 16-18 to complete 9 years equivalent. In 2012, the PKH cash amount per year varied by level of education with children of primary-school age receiving IDR400,000 (US$28) and children of secondary-school age receiving IDR 800,000 (US$56). Households with students with other disadvantages (such as related to disability, etc.) do not receive additional financial support. PKH funds in 2019 will be increased significantly from IDR 19.3 trillion (US$ 136 million) to IDR 32.65 trillion (US$230 million). Among children aged 0–6 in the poorest 40 per cent of the population, only 18 per cent are covered.
In 2018, the government of Papua province in Indonesia introduced a quasi-universal child grant programme for children aged 0–4. Papua is the region with the highest level of child poverty in the country – 35.4 per cent of the population live below the national poverty line. Referred to as the BANGGA Papua programme, it covers over 20,000 children in 2018, and the plan is to further roll it out to eight new districts in 2019 and all 27 districts in the province by 2021.
To reach the most vulnerable children, the Indonesian Government is planning several pilot programmes and reforms to existing schemes, including the integration of PKH with the education grant programme, Programme Indonesia Pintar (PIP), with the goal of extending social protection to reach 28 million children in the coming years.