Making BOS Effective Under Decentralization Policy Brief December 2010 KEMENTERIAN PENDIDIKAN NASIONAL 58622 Government's largest education program; in 2009, BOS accounted for 8.9% of the total national education expenditure (Table 1). Table 1: BOS Key Features3 Category Status in 2009 Coverage of 207,826 schools3; 41.3 million students schools and students (MONE+MORA) Annual allocation Rp. 397,567 (approx US$44) per student (Primary) Annual allocation Rp. 570,945 (approx US$63) per student (Junior Secondary) Photo by World Bank Team BOS allocation per Primary: US $7,832; (178 students) school/annum on Junior secondary: US $17,640; (280 students) I. BOS and access to basic education average BOS share of total 8.9% (22% of the central government) The Government of Indonesia (GoI) continues to make significant education budget investments to meet its constitutional obligation of ensuring basic education1 for all children, including the poor or those Fund flow Direct transfer to schools in quarterly otherwise disadvantaged. Progress in terms of improving access mechanism installments. to basic education, particularly at the primary level has been Approval and By the school committee (principal and commendable. However, the significant increase in the cost of implementation parents); the chair of the school committee education as well as the opportunity cost as children progress of budget at the co-signs the budget plan and expenditure from primary to junior secondary school is a key challenge for poor school level. report. households and government alike. Another factor which affects Reporting Transfers to schools recorded by the Ministry decisions on how long children stay in school, is the quality and of Finance; quarterly reporting on BOS fund relevance of education offered, especially to children "at risk" of allocations and expenditures by schools to dropping out or not continuing to the next level, because of poor districts. learning. In addition, where parental involvement or oversight Audit Clean audit for 2008 and 2009 by BPKP of schools is low, it tends to make schools less accountable and responsive to student needs. BOS (Bantuan Operasional Sekolah or School Operational II. BOS and School Based Management Assistance) seeks to improve access to basic education for The BOS program, initiated in 2005, is not only Indonesia's most every child in Indonesia. It disburses block grants based on an significant policy reform in education financing, it is also leading easily understood per student funding formulae, directly to the Government's transformation of the education sector from a public, private or religious schools, thereby lowering school centralized system to one supporting School Based Management fees2 that traditionally financed school operations. It is also the (SBM) see Figure 1. Recent international evidence44, based on rigorous impact 1 Basic education in Indonesia consists of primary (grades 1 - 6) and junior secondary (grades 7-9). evaluation of SBM found that SBM changed the dynamics in the 2 These include: (i) entrance fee for new students; (ii) registration fee for old students; (iii) uniform fee; (iv) tuition fee; (v) book fee; (vi) student worksheet; (vii) 3 MONE(2009). Indonesia Educational Statistics in Brief 2008/09. Pg 116 and pg 142. computer fee; (viii) cooperative fee; (ix) extracurricular courses/lessons; (x) scout 4 World Bank (2008). What Do We Know About School Based Management? World fee; (xi) student farewell fees; (xii) study tour; and (xiii) others. Bank. Washington.DC. Making BOS Effective Under Decentralization Figure 1: How School-Based Management influences learning outcomes SELF-EVALUATION · Student achievement RESOURCE POLICIES · Organizational growth · Establishment of block grant · IT strategy · Library resources · Building maintenance · Community resources · Parental contribution · Revenue generation INSTRUCTIONAL POLICIES · Curriculum SCHOOL MANAGEMENT · Assessment STUDENT LEARNING COMMITTEE MISSION AND · Parent representatives · Non-formal education OUTCOMES GOALS · Teacher representatives · Time allocation · Principal · Homework policy PERSONNEL POLICIES · Student support · Other community members · Recruitment · Induction/Professional development · Performance management · Reward and compensation · Deployment and work allocation · Exit policy EXTERNAL ASSESSMENT · Student outcomes · GOVERNMENT COMMUNITY FAMILY · Policy formation · Media and social culture · Parenting · System design and setting of · Business and non -government · Homework support standards organizations' support for schools · Parent -teacher association · Regulation · Community resources to support · Participation in school governance · Quality assurance informal education · Voluntary services · Partnershi p and professional support to schools Source: Adapted from "Transforming Schools into Dynamic and Accountable Professional Learning Communities". School Based Management Consultation Document. www. info.gov.hk/archive/consult/2000/SBM. school because of changes in the behavior of parents (who became The decentralization of BOS offers a window of opportunity to take more involved) and teachers who changed their actions. These stock of the benefits of this program, and also to consider how changes led to positive impacts on repetition rates, failure rates, BOS funds, in combination with local government spending on and learning outcomes based on standardized test scores, with education, can address some outstanding issues related to equity, schools achieving progress on one or more of the above indicators. efficiency and quality of education in Indonesia. Within Indonesia, BOS too has made a vital contribution to Ensure continuity of School Based Management and improving access to basic education for children from the community empowerment poorest households. Net enrolment rates (NERs) for the poor at the primary school level have increased to 93.81% in 2009. At the The success of BOS in promoting school based management junior secondary level, BOS helped raise the NER of the poorest lies in; (i) block grants being delivered directly to school children from 52% in 2006, to 59% in 2009, while also increasing bank accounts and; (ii) the ability of school staff and school their completion rates from 50% to 55% over this period (SUSENAS committees to determine the use of funds among eligible 2006 and 2009). categories of expenditures. Full accountability of fund use is currently assured by linking expenditures to school development III. Key issues to be addressed under a decentralized plans, requirements for maintaining updated financial records, oversight by the School Committee, internal and independent BOS monitoring and annual BPKP audits. In July 2010, the GoI formally announced its intention to Allocating BOS through the DPA (Budget) mechanism risks decentralize the BOS program in 2011, beginning with allocation fragmentation of this well-functioning system as different of BOS resources to schools through the regional government procedures would need to be followed for private and public budget. 2 School Meeting, Photo by Erlangga Agustino L schools and within the latter between primary and junior secondary activities are allowed under BOS as and when needed by schools, schools. This increases the likelihood of bureaucratic bottle necks, our findings indicate that the allocations for honoraria tend to be lower transparency, slower fund flow and greater fiduciary risks. regular for staff with amounts varying according to seniority and Furthermore, it runs counter to the decentralization of decision type of tenure. making for fund use and accountability for education outcomes directly to communities. Recommendation: Given the significant incentives for teachers to enhance their income through the teacher certification process, Recommendation: With decentralization, appropriate fund flow school operational support funds such as BOS should no longer mechanisms under APBD would need to be developed that ensure be allowed for honoraria for PNS teachers for activities which that BOS funds are delivered in lump sum amounts directly to all clearly lie within their basic obligations as teachers. Spending on schools i.e. public and private by over 500 districts and are used honoraria for PNS staff (teachers and school principals), may only in accordance with needs determined by school staff and school be allowed under exceptional circumstances such as inter-school committees. competitions and needs to be approved by the school committee. Improve the adequacy5 of BOS by reducing spending on Address the risk of BOS contributing to an excessive honoraria teacher workforce The high spending on honoraria from BOS leaves fewer The large presence of temporary teachers creates an additional resources for other expenditures of direct benefit to students, barrier for government efforts to rationalize the overall which can help reduce the significant burden of tuition fees employment of teachers and their deployment according to that continue to be charged, even from the poorest students. acceptable student teacher ratios. Although BOS was intended Findings from the Regional Independent Monitoring (RIM) survey6 to hire temporary teachers with specific skills not offered by the under BOS-KITA shows that the use of BOS funds continues to be current teachers in a school, there are indications that temporary dominated by spending on honoraria; either as explicit honoraria teachers hired using BOS funds are more or less permanent and for temporary teachers or as implicit salary supplements for PNS form a significant share of all school staff ; 30% in public primary (civil service) teachers undertaking curriculum development, schools and 18% in public junior secondary schools (Table 2). This remedial learning, enrichment learning or helping students has in effect led to the creation of a parallel teacher workforce. prepare for examinations7. Although teacher honoraria for such Recommendation: BOS funds should only be used for funding 5 Ghozali(2008) estimated non-personnel costs of education per student per annum temporary teachers as long as the total number of teachers in as Rp 509,535 for primary and Rp 709,880 for junior secondary level. ADB(2009) a school is in accordance with government mandated student estimated non-personnel education costs per student per annum as Rp 382,000 to teacher ratios. Priority should be given by districts to the for primary and Rp 731,000 for junior secondary on the assumption that textbooks redeployment of PNS teachers to meet shortages in schools that are used for three years. A nationally representative costing study is currently underway to update these cost calculations. are seeking to hire temporary teachers. 6 The RIM survey examined use of BOS funds according to 14 eligible categories in 2,060 schools across 71 districts in 33 provinces. 7 In 2008, public junior secondary schools spent 27% of BOS on temporary teacher honoraria; private junior secondary schools spent, 34% RIM, (2008). 3 Making BOS Effective Under Decentralization Table 2: Teacher categories (as a % of total teachers) households (Figure 3), which arguably could have been greater in the absence of BOS funds. While some school fees have reduced as a result of BOS, the decline for the poorest quintile Teachers PS JSS has been less than the decline for the richest quintile. Notably, spending on books and stationery, has more than halved for Public Private Public Private the poorest students at the primary and junior secondary level Civil Service (PNS) staff 67% 31% 81% 33% between 2006 and 2009. Teachers funded by - 26% - - Foundations Figure 2: Percentage of households who report being exempt from tuition fees by quintile Contract teachers funded 1% 1% 0% 0% by MONE Primary school (SD) Contract teachers funded 2% 1% 1% 1% Tuition fees 100 by Local Government Pre-BOS Post-BOS Temporary teachers 30% 41% 18% 65% 80 % students exempt Source: RIM (2008) 60 Consolidate all support to children from poor households through demand side measures 40 The BOS mechanism has been less effective in targeting 20 the poor and will likely remain so until such a time as GoI 2002/03 2005/06 2008/09 launches a reliable mechanism to identify the poor. In 2009, only 45 percent of poor students in primary, and 33 percent of poor students in junior secondary school reported being Junior secondary school (SMP) exempt from tuition fees (Figure 2), with marginal difference Tuition fees between public and private schools. The cost to the poor that 100 Pre-BOS Post-BOS paid tuition fees rose between 2006 and 2009 for primary and junior secondary school, albeit from a low base value. While 80 % students exempt the BOS program has been categorized as a pro-poor program8, and does contain provisions for providing free education to the 60 poor i.e., (i) not charging them any school fees and in addition (ii) providing them with transportation costs, the BOS program is not 40 designed to be nor has it been a very effective pro-poor program. This is due to several reasons: 20 2002/03 2005/06 2008/09 In the absence of any clear mechanism to identify and target Richest Quintile 4 Quintile 3 the poor, schools are using subjective criteria to determine Quintile 2 Poorest All students poor students from those already enrolled in school9; and Sources and notes: World Bank staff calculations based on SUSENAS household poverty targeting criteria can vary across schools, even within survey education modules from 2003, 2006 and 2009. Figures are for students from the same sub-district. all schools (i.e. public and private, secular and religious). Students are considered to be exempt from a fee if they report a zero Rupiah figure for the fee category. Given the competing demands on the use of BOS funds, even among those identified as poor students, only 18% were Recommendation: GOI should consolidate all education related receiving support for transportation costs (RIM 2008). financial support to children from poor households through a The decline in the real value of BOS (between 2005 and 2009), demand side measure10, rather than have this disbursed in small high expenditures on honoraria as well as weak monitoring amounts through different supply side programs such as BOS. and/or enforcement by districts also led to a reintroduction of The demand side approach would also be beneficial in targeting school fees for the poor. SUSENAS (2009) shows that various enrollment of out of school children. Going forward, GoI would fees continue being paid by a majority of poor students, and also need to ensure that the real value of the BOS is maintained that spending on tuition fees, transportation and uniforms by having it systematically adjusted for inflation, and more strictly contributed the most to the rise in education spending by poor enforcing the policy of no fees being charged to poor students. 10 An assessment of the pilot Conditional Cash Transfer program (PKH) which is 8 "..free all poor students from all education costs at both public and private schools." contingent on an attendance rate of at least 85% by beneficiary students shows BOS Manual 2009. that verifying adherence to the condition i.e. school attendance by the poor 9 The BOS program is not unique in facing poor targeting of students. Currently, currently remains a challenge. These implementation issues need to be managed different social safety net programs such as Program Keluarga Harapan (PKH), and by the district and sub-district governments. Jamkesmas use different criteria as well as different databases to identify and target poor beneficiaries. 4 Making BOS Effective Under Decentralization Figure 3. Average monthly household expenditure by level of education (Rp. 2005/2006 prices) PRIMARY JUNIOR SECONDARY PRE-BOS POST BOS PRE-BOS POST BOS 2002/2003 2005/2006 2008/2009 2002/2003 2005/2006 2008/2009 Richest 84,516 87,752 91,276 Richest 155,072 156,538 141,964 Q4 43,419 45,059 48,001 Q4 99,305 92,084 93,788 Q3 31,402 33,197 37,719 Q3 77,330 71,230 79,407 Q2 24,206 24,705 33,460 Q2 62,850 56,980 68,979 Poorest 18,447 18,276 31,270 Poorest 50,066 41,601 58,542 JUNIOR SECONDARY 100,000 Avg. Monthly Household Expenditure (Rp.) Avg. Monthly Household Expenditure (Rp.) 180,000 90,000 160,000 80,000 140,000 70,000 120,000 60,000 100,000 50,000 40,000 80,000 30,000 60,000 20,000 40,000 10,000 20,000 0 0 2003 2006 2009 2003 2006 2009 Richest Q4 Q3 Q2 Poorest Source: SUSENAS VARIOUS SURVEYS Make the link between funding, school development class hours rather than on; (i) remedial learning and enrichment and improved learning learning or; (ii) exam preparation /testing activities, (that simply replicate poor teaching practices after hours and at considerable Improving student learning requires not just funding but cost). different strategies over the short and long term. Over the short term MONE can play a useful role in disseminating Recommendation: While improving the quality of teaching good practices in school development planning, teaching through pre-service and in-service teacher training, teacher and learning, and reinforcing accountability for student management and expanding the ways by which students are performance, while undertaking an overhaul of the teaching assessed is a long term undertaking11, over the short term, GoI could and student assessment system over the longer term . consider; (i) disseminating ICT based resources on good teaching and learning behaviors, conducive classroom environment, and A number of factors interplay to produce good learning outcomes examples of low cost learning materials, to schools along with BOS such as: (i) provision of adequate and relevant inputs; (ii) a Manuals. While these activities may not improve learning outcomes progressive curriculum; (iii) teaching/facilitation in a manner that significantly over the short term, these have been observed to improves student interest and understanding; (iv) an assessment increase student attendance and interest; both prerequisites of system that measures cognitive and non-cognitive abilities ; (v) learning; (ii) sending an update on BOS expenditures bi-annually accountability of teachers and schools and; (vi) partnerships to parents alongwith student report cards, to make explicit the between schools and households that help reinforce good learning percentage of funds spent on learning activities; (iii) continue to habits at home (Figure 1). invest in community oversight and SBM practices. In terms of inputs, while clearly adequate compensation is needed to attract and retain qualified teachers, effective teacher performance requires supplemental interventions from schools and school committees such as; (i) teacher management, and; (ii) accountability for measurable improvements in student learning. 11 Improving learning outcomes will require an overhaul of the teaching and In addition, schools and School committees also need to ensure assessment system in Indonesia, which could involve universities or other that BOS funds are being spent on inputs that enable adequate institutions delivering the pre-service and in-service training and undertaking teaching and learning throughout the school year and during regular student assessments independently of the schooling system. 5 across governments and over time depending upon the overall budgetary situation. One weakness in allocating resources has been not knowing what is deemed adequate in terms of school operations. To help address this, GOI has now mandated the Minimum Service Standards in Education (MSS)13 and a nationally representative baseline survey is currently underway to estimate the cost of meeting the MSS for basic education. This is expected to help guide local governments on their expected share to meet the gap in school operational funding that is not covered through BOS. While establishing the MSS is a useful way of ensuring inputs, going forward GOI may consider gradually shifting the focus of public debate from funding "equitable inputs", as has been the case with investments in teachers, to providing districts, principals and teachers with incentives and accountability for "equitable performance" reflected in better learning by students. BOS Information Disclosure, Photo by Hafid I. Alatas Recommendation : With the Decentralization of BOS in FY 2011, Decrease disparities among high and low performing while all schools will continue to receive the fixed BOS, the central districts and schools government may consider supplemental financing that serves as a performance incentive for target districts, and within those districts, Equitable funding of schools does not automatically performance based funding of target schools. In line with GOI's translate into equal performance as the latter is determined policy of assisting lagging regions over the course of the current by many institutional, process and socio-economic factors. Medium term Development Plan(RPJM; 2010-2014), the eligibility The challenge for local governments lies in: (i) developing criteria for identifying poor districts could include those with (i) systems that identify high risk schools and at risk students, (ii) low levels of regional GDP per capita and; (ii) high poverty rates. supporting schools in attaining what they have identified as performance criteria, on the basis of which certain districts from the their school development goals and; (iii) creating incentives for eligible pool could be selected for funding could include indicators improvements in performance reflected in student retention such as (i) BOSDA effort vis a vis fiscal capacity; (ii) improved teacher and learning. deployment in primary schools; (iii) improved primary to junior secondary transition rates and; (iv) improvement in National Exam One of the important objectives of BOS was to have a demonstration results at grade 6 and/or 9. The Performance agreement would effect on districts so that they would supplement central require selected districts to in turn target assistance (including government allocations to schools via BOS, with own resources funding) to those schools that are among their lowest 30% in terms through BOS Daerah (BOSDA), or local BOS in keeping with their of performance but have made improvements over the past year. legal responsibility for basic and secondary education. Districts could determine performance criteria for schools that broadly reflect the national priorities and make their ranking and While some local governments12 are providing additional reward of schools publicly available through scorecards. funds to supplement BOS, the amount can vary considerably 12 Local governments includes provincial and district/city governments. 13 Minister of National Education Regulation 15/2010 The Government of the Kingdom of the Netherlands and the European Commission have provided grants for the Basic Education Capacity Trust Fund (BEC-TF) with the purpose of supporting the Government of Indonesia in improving the delivery of decentralized basic education. Managed by the World Bank, the BEC-TF supports analytical work and thematic dialog in education between the Government and development partners at the national level. At local government level, it supports capacity development and strengthening of systems for planning, budgeting, financial and information management in the education sector. The findings, interpretations and conclusions expressed in this publication do not necessarily reflect the views of the Government of Indonesia, the Government of the Kingdom of the Netherlands, or the European Commission. Human Development Sector, World Bank Office Jakarta Indonesia Stock Exchange Building, Tower 2, 12th Floor | Jl. Jenderal Sudirman Kav. 52 ­ 53 | Phone: (021) 5299 3000, | Fax: (021) 5299 3111