General senior secondary education financing in Indonesia

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.
Executive