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BOSDA: Enhancing Equity and Performance through Local School Grants in Indonesia

July 30, 2013

World Bank Group

  • The Indonesian government’s School Operational Assistance program, or BOS, provides essential budgetary support to schools for operations costs. Grants for schools are allocated on a per-student basis. The program currently provides grants to 228,000 schools benefiting an estimated 43 million students. In 2012, 8.1 percent of the total government education budget was spent on BOS.
  • BOS per-student allocation formula does not account for differences in school operating costs, which vary based on size and location of schools. Schools in remote areas, serving poor households, often require additional resources even though they may have fewer students than urban schools.

  • Some regional governments have attempted to fill the gap between the BOS grants schools receive and their actual operating costs by introducing local school grants or BOS Daerah (BOSDA). However, allocating BOSDA using a per-student formula fails to take into account the differences in operating costs schools face, because of the populations they serve and their location. Schools in remote areas serving poor households are more likely to require additional resources to provide a level of education similar to schools in wealthier areas.
  • The Ministry of Education and Culture is working with the World Bank in developing a pilot program to reinforce efforts by regional governments to improve the allocation of BOSDA. The BOSDA Improvement Program, which began in 2010, was also supported by the European Union and the Government of the Kingdom of the Netherlands. The program has developed a formula to help address financing inequalities between schools and allows for:
    1. A basic allocation to all schools regardless of their student population or geographic location.
    2. An equity allocation to address a school’s remoteness, its current state of repair and the socio-economic characteristics of its students.
    3. A performance-based allocation that provides incentives for schools to raise learning levels.
  • The pilot program operates in 18 districts and 1 province, and early results are promising. In Kaimana, West Papua, the equity and performance allocation was applied and it improved the distribution of resources to small and remote schools. Kaimana has also used annual changes in a school’s national examination score as a key performance indicator, in order to provide additional resources under the performance-based allocation.
  • Two important lessons have been learnt from the pilot program:
    1. Allocation mechanisms should be easy to understand.
    2. Indicators used as part of the formula must be easily measurable and be part of routine data collection.
  • BOSDA is designed to encourage and support school-based management through the provision of additional discretionary funds at the school level. The more effective formula-based allocation mechanisms are an important first step in improving the efficiency and effectiveness of public education spending. It has the potential to raise education quality for all students and narrow achievement gaps between schools across Indonesia.