Education budget in COVID times – The Case of Indonesia Subnational Governments

• In Event: System approach for transformation: the case of Indonesia

Proposal

Indonesia, as most countries around the world, was hit strongly by the COVID-19 pandemic between 2020 and 2022. Major disruptions were experienced in all aspects of life. Due to lockdowns and a series of restrictions to limit the expansion of the virus, economic activity fell significantly. The central and local governments were challenged to support individuals and keep the provision of public services running in a context of reduced government revenue and overall uncertainty (at least initial uncertainty). In particular, in the education sector, the COVID-19 pandemic led to full or partial closure of schools for an approximate 644 days, while there were major efforts from authorities to keep student learning going despite school closures.
Indonesia, the country with the fourth largest number of students in its education system, has a two tiered/decentralized education system. Most schools and students attend schools run by the more than 500 local governments, comprising districts and provinces. The local governments have the right to establish their own budget, though they must obey a constitutional mandate to allocate 20 percent of its budget to education. This presentation analyzes the efforts of local governments to keep student learning going from a budget perspective during the pandemic. In particular, the presentation focuses on how the districts and provinces adjusted their budgets by functions and categories of spending due to the pandemic. The analysis takes advantage of detailed data of subnational government budgets, both planned budget (Anggaran) and execution (Realisasi), collected by the Ministry of Finance.
The presentation/paper starts with a brief description of the education sector in Indonesia and the main budget regulations. Then, it analyzes compliance with the 20 percent rule prior, during and after the pandemic, presenting at the same time the main categories of spending by districts. Then the presentation focuses on the nominal changes in expenditure and analysis of the differences between planned and realized budgets, especially during the period of the pandemic. As much as possible, the presentation explores potential determinants of differences among districts and provinces, especially, size of the local government, years of education, poverty, among others.
The analysis shows that local governments protected the education budget vis a vis other budget functions (the average shared of education budget during years of the pandemic increased), though, in nominal terms education budget decreased and there were large gaps between the planned and the realized education budgets (specially in 2020). Among districts, districts that represent cities (Kotas) made the largest adjustments to their education budget, likely signaling the higher impact of the pandemic in urban areas. The category of expenditure that suffered the most was salary related expenses, while there was an important increase in goods and services. Likely reflecting the urgency of districts in finding alternative ways to reach students in a context where schools were closed.

Author

• javier luque, Global Partnership for Education