69870 The BOSDA Improvement Program: Enhancing Equity and Performance through Local School Grants Policy Brief May 2012 KEMENTERIAN PENDIDIKAN DAN KEBUDAYAAN • BOS to BOSDA: From Greater Access to Greater Equity contest any differences in the allocation actually received by their schools. The School Operational Assistance programme (BOS), initiated by the Ministry of National Education in 2005, provides basic As BOS expanded, the Ministry recognised that even the education schools with block grants. The program currently substantial resources provided by BOS could not compensate provides grants to 228,000 schools benefiting an estimated 43 schools for differences in school operating costs associated million students. In 2012, 8.1% or Rp 23.5 trillion of the total with the populations they served and their location. For government education budget was spent on BOS. example, the costs of providing basic education (e.g. supplies and travel costs for teachers) in small, remote and rural schools The aim of the school grants program, allocated on a per- is often higher than in larger, more urban schools. student basis is three-fold; to improve access to and raise the quality of basic education, reduce the financial burden for Some regional governments have attempted to fill the gap students and to support school based management reforms. between the BOS grant schools receive and their actual Grants have supported the purchase of goods and services operating costs by introducing local school grants (BOS meant to enhance educational quality (e.g. texts and library Daerah). In a survey conducted in 2009 by the Ministry of books, teaching-learning materials, teacher professional National Education, approximately half of all provinces and development activities, and remedial learning) and have 60% of districts were providing BOSDA to at least some of reduced the need for schools to seek funds from parents to their schools (Figure 1). Districts with BOSDA were similar to cover these expenditures. districts without BOSDA in terms of education participation rates but tended to be less poor and spend more on education. BOS grants are allocated to schools based on a common per- student formula and this is a key component of the program’s transparency. A primary school with 150 students in Kaimana Figure 1: Many regional governments already have district in West Papua receives the same grant as a school of school grant schemes that complement the national the same size in Aceh Jaya. Through information campaigns, BOS program training and socialization activities, school principals, school committees and parents are aware of the amount of the % of districts and provinces that report having BOSDA in primary and expected BOS grant. And they can use this information to junior secondary schools, 2009 Photo by M. Wildan BOSDA in Kab. Mamuju has been used to maintain school buildings Notes: In 2009, Indonesia had 33 provinces and 497 districts. Source: Ministry of National Education Province and District BOSDA Survey, 2009. • Characteristics of Provincial and District-based Figure 3: Regional school grants are smaller than School Grants grants provided by the national BOS program BOS per-student grant and average regional per-student grants in primary and Recent analysis for the education public expenditure review junior secondary schools, 2010/11 shows that students in primary schools receiving BOSDA had higher levels of learning than students in schools that did not receive the grant (see Figure 2). On average, students in schools receiving BOSDA scored 9% and 6% higher in tests of Mathematics and Indonesian respectively. This relationship was largely driven by decisions made at the school level to use these resources to provide extra student support and teaching and learning materials. Figure 2: Students in primary schools with BOSDA perform better even controlling for other factors Average test scores for grade 5 students in Mathematics and Indonesian, 2010 Note: Regional grants are not always provided on a per-student basis but have been converted to this unit to aid comparison with the national BOS program. Per-student allocations under the BOS program increased significantly in 2012 (primary – Rp. 580,000 and junior secondary – Rp 710,000) Source: World Bank Survey of Regional School Grants, 2011 (%) school grants under the BOS program lead to reductions in the amount schools receive under BOSDA. In 2012, the per- student grant under the BOS program increased significantly. However, a follow-up survey of a random sample of 63 districts showed that BOSDA allocations for 2012 fell in only six of the 38 districts that had BOSDA in 2011. Note: Differences in performance between BOSDA and no BOSDA schools are significantly different at 1 percent level. The graph shows simple differences in test scores between stu- Local school grants are frequently provided to early childhood dents in schools that receive BOSDA and those that do not. However, the positive relationship centers and senior secondary schools in addition to the between BOSDA and learning achievement holds even when other factors are controlled for primary and junior secondary schools covered by the BOS (e.g. school and teacher characteristics and parental background). Source: World Bank Education Public Expenditure Review, 2012 program. Just under half (44%) of the districts surveyed in 2011, provided direct operational funding to early childhood education centers and 62% provided grants to senior A follow up survey, conducted by the World Bank in 2011, secondary schools. However, it was less common for regional looked at a sample of 13 provinces and 86 districts that had grants to be provided to madrasahs compared to the full some form of BOSDA. The average BOSDA allocation tended coverage they receive under the BOS program. For example, to be much lower than the BOS national per-student grant in 2010/11 only 55% of districts and 45% of provinces with (Figure 3). However, the amount varied significantly across BOSDA provided grants to madrasahs. This more limited districts and the level of schooling. In six of the 86 districts support to madrasahs reflects the more centralized control surveyed, BOSDA grants were greater than the national over these education institutions compared to the more BOS program. For example, Manokwari district in West direct control regional governments have over conventional Papua provided primary schools with Rp 476,000 and junior schools. secondary schools with Rp 684,000 for each enrolled student. In a similar way to the national BOS program, over 80% of Regional governments tend to devote a greater share of their districts and provinces use a simple per-student funding overall basic education grants to junior secondary schools formula to allocate BOSDA to schools. Some regional than the national program. On average, regional government governments include the number of classes and teachers grants were more than 75% higher for junior secondary as criteria for the size of allocation. In a small number of schools compared with grants given to primary schools. cases, BOSDA is not provided to schools but to teachers and However, in the national program the junior secondary grant principals as allowances and to teacher clusters (KKG, MGMP) was only 44% higher than the primary school grant in 2010/11. for professional development activities. In most cases, regional governments use the BOS national guidelines as a basis for The amount of BOSDA regional governments provide does allocating BOSDA. For example, many BOSDA guidelines not seem to be related to funding received under the BOS include the same 13 eligible expenditure categories as the national program. It is frequently suggested that increases in BOS program. 2 • The BOSDA Improvement Program Recognising the important role that BOSDA currently plays and its potential to develop into a performance and equity based grant, the Ministry of Education and Culture with the help of the World Bank, developed a pilot program to support efforts by regional governments to improve the allocation of Photo by Amalia Falah BOSDA. • Objectives The BOSDA Improvement Program was initially piloted in two Focus Group Discussion in Kab. Wonosobo to determine the BOSDA formula provinces and 12 districts. The main objective of the pilot was to support regional governments in their efforts to narrow • Strengthening BOSDA financing inequalities and improve both the efficiency and While BOSDA programs provide vital operating funds to effectiveness of education spending. The pilot focused on schools they have the potential to play a greater role in BOSDA allocations and aimed to: tackling inequality. Although districts have the authority • Improve current BOSDA allocation criteria to address to target BOSDA funds in a more focused fashion, current financing inequalities between schools allocation criteria often reinforce patterns of inequality. For • Create incentives for better school performance and example, BOSDA frequently provides more funds to bigger, encourage more effective, transparent, and participatory better-equipped urban schools and fewer funds to smaller, school-based management involving all education less well-equipped, rural schools. stakeholders Allocating BOSDA using a per-student formula fails to Through the experience of working with regional take account of differences in operating costs schools face governments the pilot also aimed to develop a set of national because of the populations they serve and their location. BOSDA guidelines that: Schools in remote areas serving poor households are likely • Promote the freedom of regional governments to to require additional resources (e.g. more teaching time and design their own allocation formula that are feasible to extra remedial coaching) to provide a level of education implement, allow diversity in detail, and promote greater provision similar to a school in a wealthier area. The price of equity school supplies can also vary significantly between accessible • Encourage regional governments to provide more and more remote areas because of associated transportation discretion to each school to propose, finance, and costs. A school in a remote part of Papua can purchase fewer manage activities responding to their particular context textbooks and other supplies than a school in Jayapura, the and needs and to the outcomes desired for their students provincial capital, even with the same amount of BOSDA. Some school operating expenses do not vary with levels of enrolment and this can further disadvantage small schools. For example, electricity usage does not vary according to student numbers but with the physical size of the school and the number of classrooms. A per-student formula allocates more to a large school with higher levels of enrolment than a smaller school even if both have the same number of classrooms and similar electricity usage. Ensuring that smaller schools have enough resources to cover fixed costs is a significant issue – nearly half of all primary schools in Indonesia have fewer than 150 students. BOSDA allocations could also improve outcomes further by introducing incentives for improved school performance. Photo by Agus Incentives of this kind have the potential to provide strong signals to schools about the importance of a focus on student participation and learning. This in turn could encourage schools to devote resources and energy to improving these BOSDA supports schools in Yogyakarta by providing additional outcomes. funds for electricity, water and school maintenance 3 It was expected that through these activities the pilot would a component that provided additional resources to schools encourage regional governments to introduce a program of that demonstrated outstanding performance over the this kind if they did not already provide local school grants. previous school year (see Figure 4). The specific criteria and Where programs already existed, it was expected that the the weighting given to each of these components depended pilot would encourage governments to raise existing BOSDA on the specific characteristics of education in the region and allocations. the focus education stakeholders wanted BOSDA to have. In some cases, more focus and weight in the resulting formula Pilot provinces and districts worked on developing a was given to equity considerations while in others a greater formula-based BOSDA with three main components; a basic emphasis was given to performance based criteria. allocation, an allocation to address school inequalities and Figure 4: BOSDA formula components aim to improve equity and performance The three components of the formula and examples of indicators used for BOSDA allocation in pilot regions Basic • Flat rate allocation identical for each school level Allocation • Basic per-student allocation • Remoteness -more remote schools receive additional resources • State of school infrastructure - schools with poor infrastructure receive Equity additional resources • Small schools - schools with small number of students receive additional resources to cover fixed costs • Learning outcomes - schools with improved UN examination scores receive a larger Incentives for allocation • Student progression - schools achieving improvements in repetition rates receive a Performance greater allocation • Accreditation - schools achieving accreditation at a higher level receive additional resources In pilot regions, the process involved in developing a formula- based BOSDA covers several steps: • introduction of the formula concept to district education stakeholders, identification of potential variables to include and data collection to model proposed changes • agreement on new BOSDA formula by analyzing the impact of different formula options on allocations to schools • preparation for implementation by determining the appropriate financial procedures and preparing the necessary guidelines for the new BOSDA including policies on how funds can be spent at the school level • agreement on an implementation timetable and allocating funds to schools on the basis of the new formula Photo by Agus • monitoring and evaluation of the implementation of the new formula and revision of implementation where necessary BOSDA has provided materials to support creative learning in SMPs in Kab Purworejo 4 • Results Figure 6: Pilot districts have introduced incentives designed to improve school performance An analysis of allocations before and after new formulas were introduced indicate that resources are being allocated in a Allocation to selected junior secondary schools in Kaimana before and after more equitable way. In 2011, two pilot districts (Kaimana in BOSDA funding formula changes West Papua and Aceh Besar in Nanggroe Aceh Darussalam) allocated BOSDA using the new formula for the first time. In both districts the new formula included components that gave additional resources to remote and small schools. For example, in Kaimana the revised formula provided an additional Rp 25 million for the most remote junior secondary schools. Remote and small schools have higher per-student operating costs because of the higher price of education inputs in remote locations. They also require higher per-student allocations to cover the fixed operating costs (e.g. electricity) that can be similar to larger and less remote schools. In Kaimana, the new formula has resulted in a shift of resources from larger town schools to smaller and more remote schools (see Figure 5). Pilot districts have also introduced performance-based Note: The total budget for BOSDA fell between 2010 and 2011. To calculate the allocations shown in Figure 6 the budget for 2011 was inflated to its 2010 level. The graph shows what incentives into their redesigned BOSDA allocation formula. would have happened to allocations if the 2011 budget had been maintained at its 2010 Kaimana, for example, has used annual changes in a school’s levels. national examination (UN) score as a key indicator of performance. Additional resources are provided depending on the annual improvement in this examination. A focus on change rather than absolute levels of performance ensures The pilot program has resulted in a more equitable allocation that improvements in schools with low overall examination of BOSDA resources in participating regions. Although it is results are treated in a similar way to schools with better too early to assess the impact of these changes on education results. In Kaimana, schools that achieved an improvement participation and learning, feedback from pilot districts has equivalent to an increase of one in their average UN score been positive and a further 20 regional governments have (out of 10) received an additional Rp 30 million. For schools requested to join the initiative in 2012. Future monitoring and showing more modest improvements in their UN score evaluation activities will provide a fuller picture of the impact the additional resources were lower but still represented a of the pilot program. significant boost to school budgets (Figure 6). Figure 5: BOSDA funding formula changes have improved allocations to small and remote schools Allocations to selected junior secondary schools in Kaimana before and after BOSDA funding formula changes Note: The total budget for BOSDA fell between 2010 and 2011. To calculate the allocations shown in Figure 5 the budget for 2011 was inflated to its 2010 level. The graph shows what would have happened to allocations if the 2011 budget had been maintained at its 2010 levels. 5 • Observations and Lessons Learned Evidence to date indicates that BOSDA is a feasible, efficient and effective way of providing more funds to schools to increase enrolment and quality. The national BOS program provides vital funding to cover the operating expenses of schools. For some schools, located in rural and remote areas, BOS resources are the main - and sometimes the only - funds schools have to cover their operating expenses. Despite the key role BOS has played, local financing inequalities between schools persist. BOSDA programs are an effort to address this inequality and lead Indonesia further along the path to genuine universal basic education in terms of both initial enrolment and successful completion. Photo by Agus The positive relationship between BOSDA programs and learning outcomes suggests that regional governments should be encouraged to introduce and allocate more In Kabupaten Sleman, BOSDA has provided funds to buy resources through BOSDA type programs. The Ministry of supplementary reading materials. Education and Culture could encourage these trends by introducing performance-based transfers or matching grant schemes that provide incentives for regional governments • To the extent possible, indicators that are susceptible to introduce and increase funding of BOSDA programs. to manipulation should not be chosen as part of the Introducing transfers of this kind would need to build on formula. Where this is unavoidable, efforts to verify existing equity-focused programs currently implemented school level information need to be incorporated into from the center. monitoring and evaluation activities. • Choosing indicators and targets that schools are able Increasing the resources schools have control over places to influence and achieve through their own actions is even greater emphasis on maintaining efforts to strengthen important. While schools are likely to be able to influence school-based management. BOSDA guidelines should utilize student progression, they are less likely to be able to existing management processes and prescribe a central role influence student transition between education levels. to school committees in supporting school development and improving accountability. Parents and local community Introducing more effective formula-based allocation involvement, through the school committee, have the mechanisms for school operational funding is an important potential to ensure that BOSDA is used appropriately and has first step in improving the equity and efficiency of the the greatest impact on school improvement. education system. However, it needs to be recognized that school operational funding is only a small part of overall Getting the “right� criteria into the BOSDA allocation formula spending on education. In order to improve education is challenging and will differ across regions. However, spending further, the lessons learned in the pilot about linking experience from the pilot suggests some general principles allocations to equity and school performance need to be that can provide a useful guide: applied more broadly. Succeeding in this process could bring • To ensure BOSDA allocations are transparent and Indonesia much closer to raising the quality of education easily verified, the allocation formula should be easy to for all learners and reducing disparities in enrolment and understand. achievement across schools and districts, between girls and • Indicators used as part of the formula must be easily boys, the rich and the poor, urban and rural areas, and the measurable, part of routine data collection exercises, “abled� and the disabled, and among the large diversity of reliable and available in time to be used in the budget ethic and linguistic groups in the country. process. Printed on recycled paper 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 refl ect 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 http://www.worldbank.org/id/education