Programs in Indonesia : past, present and future

54052 Scholarships Programs in Indonesia: Past, Present and Future Cut Dian Agustina Dandan Chen Andrew Ragatz Imam Setiawan The World Bank East Asia and Pacific Region Human Development Sector Unit October 2009 1 Abstract This paper examines Indonesia's experience in implementing scholarships programs as a demand-side intervention to stimulate primary and secondary school enrollment, continuation, and completion. It compares the key features and effects of several scholarships programs in Indonesia starting from the School Grant Program (SGP) during the Asian Financial Crisis in the late 90s. It provides an early assessment of the effects of most recent scholarships for the poor program started in 2008, including program implementation arrangements such as selection and targeting beneficiaries, flow of funds, as well as monitoring arrangements. The findings of this paper indicate that, compared with Indonesia's large scale scholarship programs under the SGP, the current targeting is less effective and the average amount received by beneficiary students is less than half of what was intended. To improve program effectiveness, this paper recommends: (1) focusing on the transition from primary to secondary education by significantly increasing resources and support to Grade 6 students; (2) starting to allocate more resources to primary school scholarships, but gradually increasing the share for junior secondary scholarships; (3) using complementary household-based intervention such as Conditional Cash Transfer (CCT) to target out-of-school children; and (4) integrating programs at district level, and re-adopting independent monitoring arrangement for better efficiency and transparency. 2 Introduction Increasing school attainment is a challenge in much of the developing world. To reach a higher level achievement will require targeting those below average, in terms of both education participation and quality. In Indonesia, both the Ministry of National Education (MoNE) and the Ministry of Religious Affairs (MoRA) have long history of managing targeted scholarships programs. The scholarships program under MoNE covers students in the regular schools at the primary, junior secondary, and senior secondary level; whereas the scholarships program managed by MoRA supports targeted religious school students in madrasah and pondok pesantren (boarding school) at the primary and junior secondary level. The mandate of the Government of Indonesia in providing scholarships is explicitly specified in the education Law 20/2003, in the context of providing equal education opportunities to all Indonesian children and implementing nine-year compulsory basic education. Article 12:1c and 12:1d of the Law state that every student in every school has the right to receive financing support including scholarships for those that are performing well academically and from poor family background, and whose parents cannot afford the cost of schooling. There is strong justification for public investment in compensatory programs such as scholarships targeting the poor and the disadvantaged. These programs address both the equity and efficiency concerns in education. Although education constitutes an attractive option for households to invest in, the inability of a large number of households to meet the present costs of a complete basic education despite the existence of significant future returns provides a strong rationale for a public subsidy. For the poor, the cost of education is a 3 barrier to continuing education that for many becomes insurmountable, particularly beyond primary school. Demand-side interventions such as scholarships programs can be effective tools to assist families in covering the costs of education in order to make education more affordable. Scholarships are often targeted to encourage schooling for particular groups. The most common target is poor students who face a particularly hard time continuing schooling due to the monetary or opportunity cost of staying in school. But scholarships may also be used to target girls, ethnic minorities or other groups that are the most vulnerable when household financial resources are limited. This paper will examine Indonesia's recent history with scholarships programs, particularly since its major effort of using scholarships to keep children in school during the 1998-2000 Asian financial crises. Indonesia has also a history of using scholarships to encourage better academic performance (performance scholarships). This particular program will not be the principal focus of this paper. Instead, this paper will focus on the programs of scholarships for the poor, as our main interest is in scholarship programs as a demand-side intervention in Indonesia to simulate school enrollment, continuation, and completion. This program also has much larger coverage, together with more significant public budget allocation. The paper is organized as the following. After an overview of Indonesia's experience in scholarships programs, it will put much focus on the on-going programs. It will describe the key features of the current program design, including program implementation arrangements such as selection and targeting beneficiaries, flow of funds, as well as monitoring arrangements. These will be followed by an assessment of the early 4 impact of the programs. Finally, we will conclude with recommendations for improvement of the current program. Data source We review a number of publications on Indonesia scholarship programs as well as administrative documents by MoNE and MoRA, including guidelines, implementation manuals, and monitoring and evaluation guidebooks. These administrative documents, together with the administrative data obtained from MoNE and MoRA's respective management directorates' planning unit, constitute the basis for elaborating the programs' original objectives, planned scope, as well as budget allocation. Our key data for the assessment of the effectiveness of the program are largely various household survey data sources. These include: the National Indonesian Household Survey, SUSENAS, produced by the Central Bureau of Statistics (BPS), and the Indonesian Family Life Survey (IFLS), carried out by RAND Corporation. For the sector-wide enrollment trend, we also rely on MoNE-published annual statistics for corroboration. History of scholarship programs in Indonesia Over the past decade, scholarships programs targeting the poor have played an important role in Indonesia education, particularly during the financial crisis of 1997. Since then, the evolution of the scholarship programs in Indonesia can be grouped into four eras. (1) 1998