# **1. Introduction**

Since the early 2000s, Indonesia has dramatically increased spending on education in line with a new Constitutional requirement<sup>3</sup> for the national government and regional governments<sup>4</sup> to allocate at least 20 percent of their respective budgets to education. Between 2001 and 2012, public education spending increased from 2 percent of Gross National Income (GNI) to 4 percent.<sup>5</sup> This increased spending has contributed to significant improvements in children’s access to primary and junior secondary education, particularly through the funding of a new national school grants program (BOS) covering the operational costs of basic education and, in so doing, helping to realize the government’s long-standing commitment to free basic education. However, it appears to have contributed little to improved student learning outcomes. While Indonesian children are starting school earlier and staying in school longer, they do not appear to be learning more. The country’s performance in international standardized tests such as the Program for International Student Assessment (PISA) has improved little since the early 2000s and remains poor relative to neighboring countries. A recent World Bank (2015: 3) study concluded: ‘The bottom line seems to be that, despite all the extra spending, nothing major has changed in the performance of Indonesia’s school children’.

This outcome is related in part to problems of teacher management. Indonesia has plenty of teachers—around 3 million by one estimate ( _The Economist_ 2014). According to USAID’s Prioritas program (2015), an initiative specifically concerned with teacher management, this gives Indonesia one of the most enviable teacher-student ratios in the world: for instance, with 1 teacher for every 16 students at primary school level, it has a more generous supply of teachers than the Republic of Korea (1 per 21 students), Cambodia (1 per 48), and Brazil (1 per 22). But the quality of Indonesian teachers is poor: many lack basic competencies, particularly with regards to subject knowledge and pedagogical skills (Jalal _et al_ 2009; Chang _et al_ 2014; Pisani 2013). The World Bank study, for instance, found that ‘many teachers have major difficulties with even the most basic mathematical problems’ (World Bank 2015: 47). At the same time, Indonesian teachers are poorly distributed between schools, especially between schools in urban and rural and remote areas, and absenteeism rates, while improving, remain high (USAID Prioritas 2015; McKenzie _et al_ 2014; UNCEN _et al_ 2012; Pisani 2013). As one measure of the scale of the distribution problems, USAID (2015) found that teacher-student ratios in 23 districts ranged from 10 in urban Madiun, Central Java, to 25 in the remote rural district of Nias Selatan. Finally, rising teacher salary costs, driven by big increases in teacher pay, have crowded out spending in other areas of the education budget needed to improve education quality.<sup>6</sup> The Indonesian central government has introduced a range of reform initiatives to address these issues since the mid-2000s, some of which are beginning to have positive effects, particularly with regards to teacher numbers and cost and the quality of newly recruited teachers. These have included a moratorium on civil service teacher appointments, a more transparent and accountable system for recruiting civil servant teachers, a teacher certification program, restrictions on the number of terms that school principals can serve, and the issuance of an instruction to regional governments to address teacher distribution problems. But much analysis

> 3 The amendment was made in 2002.

> 4 We use the terms ‘regional’ and ‘local’ interchangeably throughout this report. In both cases, they are used to refer to districts ( _kabupaten_ ) or municipalities ( _kota_ ) and, depending on the context, provinces as well.

> 5 Figures are from the World Bank’s World Development Indicators database.

> 6 For an analysis of the budgetary impact of teacher salary increases, especially ones stemming from the certification program, see Chang _et al_ (2014: 161-162).

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