MEMOTo: Wendy Duncan, ADB Southeast Asia DepartmentFrom: Jonathon Flegg, Indonesian Ministry of National EducationDate: 25/05/11Subject: ADB Educational Loan Assistance1. What are major problems in primary and secondary education in Indonesia? How serious are theseproblems?At the national-level education is administered by both the Ministry of National Education (MONE) andthe Ministry of Home Affairs (MOHA). However since 2001 the whole Indonesian education system hasundergone major decentralisation in an attempt to make the system more accountable and to realiseefficiency benefits. While district-level governments have access to adequate fiscal resources, overall theadministration of education remains complex and lacks policy direction between the different agenciesinvolved. Decentralisation has presented problems of: Lack of district-level technical capacity for administering education. Unclear division of responsibilities and power between different levels of government. Constraints on the spread of information between districts about best practice.While universal primary enrolment has been largely achieved, the delivery of education remains veryinefficient and uneven. Teacher-student ratios are among the world‟s lowest (20.3 in primary and 14.2 insecondary), yet average educational outcomes in core competencies remains quite low. The mainproblems identified by MONE that have led education spending to become inefficient are: Poor teacher quality, including poor tertiary training and remuneration. High rates of teacher absenteeism.Responsibility for delivering junior secondary education rests with MONE and this level remains themajor focus for our improvement efforts. The significant issues facing junior secondary education are insharp contrast to the successes seen in achieving universal primary education in recent years. Specificallythe major concerns are: High student fall-out rate in the transition from primary to junior secondary level. Differentially higher fall-out rate among rural, poorer households.All these problems are quite serious for two reasons: they are causing significant cost inefficiencies andthey are inconsistent with Indonesia‟s overall development strategy. Lewis and Pattinasarany (2008) havefound that actual school spending, at current levels of performance, exceeds optimal levels by 60 percent.Such a significant failure to spend public funds in a cost efficient way demands immediate attention.Also Indonesia‟s economy is rapidly developing, and achieving quality basic education outcomes acrossall provinces is vital to the nation‟s growth strategy. Indonesia‟s uneven economic development has beenquite centralised around Java, and there is a strong economic imperative to promote human capitaldevelopment in outer provinces.2. What are root causes of these problems and why?Possible causes of problems concerning decentralisation. Decentralisation of education is not necessarilya „policy panacea‟ and could result in greater inefficiencies if not implemented correctly. The constraintson successful decentralisation identified above are caused by problems with a lack of centre-districtcommunication, legislation, and migration. Communication networks are not regularised, with district-level administrators working without enough technical assistance from the Jakarta. Also governance at
the district-level remains quite poor with a failure of skilled administrators and teachers to migrate toprovincial areas. Finally, the division of responsibilities in the legislation that was hurriedly drafted afterPresident Suharto left office remains unclear1. For instance, as teachers are civil servants, the IndonesianGovernment set their salaries, yet the districts are responsible for paying them.Possible causes of poor teacher quality and absenteeism. Recent increases in enrolment and the failure oftertiary teacher training to keep pace have led to lower average standards for teacher qualifications. Only60-70% of teachers current have the necessary tertiary qualifications required by law2. Poor quality mightalso be a reflection of poor incentives to teach.International evidence suggests that remuneration only bears a small relation to teacher absenteeism3.Rather absenteeism is more closely linked to whether there is sufficient school-based monitoring of theteacher‟s classroom presence, and whether the teacher‟s performance is subject to performance review byeither the principal or a PTA.Possible causes of post-primary dropout rates. According to the ILTS2 family survey, over 70% ofstudents who fail to make the transition from primary to junior secondary do so because of the „need towork‟4. However this response may mask other economic reasons, as only one in five respondentsactually did work. The costs of schooling, including excessive transportation costs, are likely the majorreason for high dropout rates at the beginning of secondary school.3. How would you compare them against each other based on the importance and seriousness of theissues?Any comparison should be on the basis of the most cost efficient way of achieving a given improvementin educational outcomes, with due consideration for strategic complementarities with other educationalimprovement programs. Given Indonesia‟s level of development, outcomes should be primarily beconsidered to be core competencies in literacy and numeracy. Some emphasis on outcomes in English andcomputing skills might also be warranted as valuable educational outputs.Complementarities may exist with other recent programs initiated by either the Indonesian Government ortheir international partners such as the World Bank, USAID and AusAID. There is no rationale induplicating efforts that have already been initiated but may not yet have had time to produce a noticeableeffect on outcomes.4. What specific problem area(s) should the proposed ADB loan project target and why?Firstly it must be considered that significant funds from Indonesia‟s international partners have beenimplemented in ongoing SBM and teacher training programs, with particular reference to USAID‟s DBEand the World Bank BERMUTU program5. Also recently MONE has thoroughly addressed the issue ofincreasing teacher remuneration.ADB loan funds can be most efficiently allocated to a new program seeking to introduce: Technology-based monitoring of teachers in schools to reduce absenteeism. Duflo and Banerjee (2006) have documented a number of randomised trials that have shown supplying classrooms with digital cameras for twice-daily photographing of teachers is an efficient method of significantly reduce teacher absenteeism.1 Laws 22/1999 and 25/1999, in addition to Education Law 20/2003, have established educational decentralisation.2 Weston, S. (2008). “A Study of Junior Secondary Education in Indonesia”, pg. 24. Retrieved from: ddp-ext.worldbank.org/EdStats/IDNdprep08.pdf.3 Banerjee and Duflo (2006) “Addressing Absence”. J Econ Perspect 20(1): 117–132.4 Weston, pg 3.5 For a full list of donor programs see: Weston, pg 32.
A migration assistance package eligible for skilled administrators or secondary teachers to incentive relocating from highly-staffed to low-staffed districts. In aggregate, Indonesia does not have a shortage of administrators or secondary teachers, however currently very few of them are located in the provincial areas. To redress the capacity and teacher gap in provincial districts a financial incentive should be offered to qualified individuals to migrate out of high-staffed areas. It will also assist in raising the level of qualifications among teachers in provincial areas, and in will eventually assist in improving outcomes so that they catch up to those in high-performing districts. A randomised trial of conditional transfers for poor households who retain their children in attendance throughout junior secondary school. Poor households incur implicit costs in sending their children to school, whether they are transportation or tuition costs, or the opportunity cost of retaining their child in the workforce. A conditional transfer scheme should address all these costs of attending6. A trial could be implemented in provincial districts using a multi-stage sample selection process, and if dropout rates fall then the trial could be extended. Students already receiving JSE scholarships would be ineligible for a conditional transfer. School bus funding program. Where necessary provincial high schools could also apply to MONE for funding to purchase school buses. School buses will reduce the implicit transportation costs for poorer rural households to send their children to high school.5. What information (data) should be collected to provide more conclusive evidences to answer questionsabove? How would such information (data) be collected? A national randomised survey of teachers ascertaining their school district, qualifications, salary, job satisfaction, salary satisfaction and preparedness to relocate. If teachers are willing to relocate, they should be asked where they are prepared to relocate to and what obstacles they envision in making such a move. Perform a Dif-in-Dif examination of absenteeism within a small number of schools to examine whether the recent salary changes had a noticeable effect on reducing absenteeism. Using the recent change in salary structure as a natural experiment, a study could compare absenteeism before and after the salary change with that of teachers who did not receive a salary change. This examination could identify if there is any predicted effect of salary on absenteeism. Alongside this study a further Dif-in-Dif examination could be performed which randomly treats teachers with technology-based monitoring and compares their change in absenteeism with a control group. A household survey that is more comprehensive that the ILTS2 family survey should be conducted to ascertain the underlying reasons behind the higher dropout rate among poorer, rural households. The survey should include stated preferences on school district, household income, school attendance, known school attendance costs, and reason for sending or not sending children to school. Additional data should also be collected on the geographic proximity to a school and most likely mode of transport to that school. Finally the trial of conditional transfers is a data collection exercise in itself, and should follow best practice for experimental procedure. Recipients should be randomly selected in a multi-stage sampling process for provinces and districts and should be conditional only upon low household income. The drop-out rate for non-qualifying students, and a control group of qualifying students who do not receive transfers should also be collected for comparison puposes.6 Suryadarma et al, 2006. “Causes of Low Secondary School Enrolment in Indonesia”. Retrieved from:www.smeru.or.id/report/workpaper/lowschoolenroll/Enrollmenteng06.pdf .