Document of The World Bank fileBOS Bantuan Operasional Sekolah (School Operational Assistance) BOSDA Bantuan Operasional Sekolah Daerah (School Operational Assistance by Local Government)

Document of The World Bank

Report No: ICR1546

IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-75910)

ON A

LOAN

IN THE AMOUNT OF US$1.1 BILLION

TO THE

THE REPUBLIC OF INDONESIA

FOR A

SCHOOL OPERATIONAL ASSISTANCE – KNOWLEDGE IMPROVEMENT FOR TRANSPARENCY AND ACCOUNTABLITY PROJECT

(BOS-KITA)

June 27, 2013

Human Development Sector/Education Indonesia Country Department East Asia and Pacific Region

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CURRENCY EQUIVALENTS

(Exchange Rate Effective April 24, 2013)

Currency Unit = Indonesian Rupiah US$1 = IDR 9,717.5

FISCAL YEAR

January 1 – December 31

ACADEMIC YEAR July 1 – June 30

ABBREVIATIONS AND ACRONYMS ADB Asian Development Bank APBD Anggaran Penerimaan dan Belanja Daerah (Regional/Sub-national Budget) APBN Anggaran Penerimaan dan Belanja Negara (State Budget) BAPPENAS Badan Perencanaan Pembangunan Nasional (National Development Planning Agency) Balitbang Badan Penelitian dan Pengembangan (Research and Development

Unit) AusAID Australian International Development Agency APL Adaptable Program Loan BEC Basic Education Capacity Program BOP Biaya Operasional Pendidikan (Education Operational Assistance) BOS Bantuan Operasional Sekolah (School Operational Assistance) BOSDA Bantuan Operasional Sekolah Daerah (School Operational Assistance

by Local Government) BOS-KITA School Operational Assistance-Knowledge Improvement for

Transparency and Accountability BPK Badan Pemeriksa Keuangan (State Audit Agency) BPKP Badan Pengawasan Keuangan dan Pembangunan (Financial and

Development Supervisory Board/Internal Audit Agency) CAS Country Assistance Strategy CCD Community Driven Development CDP Capacity Development Plans CPIU Central Project Implementation Unit CPS Country Partnership Strategy DESP Dutch Education Support Program DG Directorate General DIPA Daftar Isian Pelaksanaan Anggaran (Preparation and Ratification of

Budget Allocation List - Approved Budget Document) DO Drop-out FBE Free Basic Education

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FM Financial Management FY Fiscal Year GDP Gross Domestic Product GER Gross Enrollment Rate GoI Government of Indonesia IFR Interim Financial Report JSS Junior Secondary School KDP Kecamatan Development Project KPK Komisi Pemberantasan Korupsi (Anti-Corruption Commission) KUD Kas Umum Daerah (District Treasury) KUN Kas Umum Nasional (National Treasury) MDG Millennium Development Goals MoEC Ministry of Education and Culture MoNE Ministry of National Education MoF Ministry of Finance MoNE Ministry of National Education MoRA Ministry of Regional Affairs MoU Memorandum of Understanding MSS Minimum Service Standard NER Net Enrollment Rate NPV Net Present Value P4R Program for Results PAD Project Appraisal Document PNPM Program Nasional Pemberdayaan Masyarakat (National Program for

Community Empowerment) PNS Pegawai Negeri Sipil (Civil Servants) PS Primary School QEA Quality at Entry QER Quality Enhancement Review RENSTRA Rencana Strategis (Five Year Strategic Plan) RIM Regional Independent Monitoring RKAS Rencana Kegiatan dan Anggaran Sekolah (School Activity and

Budget Plan) RKT Rencana Kegiatan Tahunan (Annual School Work Plan) ROC Regional Operations Committee SBM School Based Management SD Sekolah Dasar (Primary School) SGP Scholarship and Grants Program SIGP School Improvement and Grant Program SIL Specific Investment Loan SIP School Improvement Plan SISWA School Improvement through Sector Wide Approaches SMIC Social Marketing and Information Campaign SMP Sekolah Menengah Pertama (Junior Secondary School) SMS Support My School SPPB Surat Perjanjian Pemberian Bantuan (Agreement Letter in Providing

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Assistance) STR Student Teacher Ratio SUSENAS Survey Sosial Ekonomi Nasional (National Economic-Social Survey) SY School Year TIMSS Trends in International Mathematics and Science Studies TRIMS Tools for Reporting Information and Management Systems Team for

the Acceleration of Poverty Reduction) USAID United States Agency for International Development

Vice President: Axel van Trotsenburg

Country Director: Stefan G. Koeberle

Sector Manager: Luis Benveniste

Project Team Leader: Ratna Kesuma

ICR Team Leader: Ratna Kesuma

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INDONESIA School Operational Assistance – Knowledge Improvement for

Transparency and Accountability Project (BOS-KITA)

CONTENTS

Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Project Performance in ISRs H. Restructuring I. Disbursement Graph

1. Project Context, Development Objectives and Design ............................................... 12. Key Factors Affecting Implementation and Outcomes .............................................. 53. Assessment of Outcomes .......................................................................................... 144. Assessment of Risk to Development Outcome ......................................................... 225. Assessment of Bank and Borrower Performance ..................................................... 236. Lessons Learned ....................................................................................................... 257. Comments on Issues Raised by Borrower/Implementing Agencies/Partners .......... 26Annex 1. Project Costs and Financing .......................................................................... 27Annex 2: Outputs by Component. ................................................................................ 28Annex 3. Economic and Financial Analysis ................................................................. 36Annex 4. Bank Lending and Implementation Support/Supervision Processes ............ 43Annex 5. Beneficiary Survey Results ........................................................................... 45Annex 6. Stakeholder Workshop Report and Results ................................................... 46Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR ..................... 47Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders ....................... 53Annex 9. List of Supporting Documents ...................................................................... 54

MAP

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A. Basic Information

Country: Indonesia Project Name:

BOS Knowledge Improvement for Transparency and Accountability

Project ID: P107661 L/C/TF Number(s): IBRD-75910 IBRD-79060

ICR Date: 06/27/2013 ICR Type: Core ICR

Lending Instrument: SIL Borrower: GOVERNMENT OF THE REPUBLIC OF INDONESIA

Original Total Commitment:

USD 600.00M Disbursed Amount: USD 1,100.00M

Revised Amount: USD 1,100.00M

Environmental Category: C

Implementing Agencies: Ministry of Education and Culture, Directorate General for Management of Basic Education

Cofinanciers and Other External Partners: B. Key Dates

Process Date Process Original Date Revised / Actual

Date(s)

Concept Review: 05/08/2008 Effectiveness: 11/11/2008 11/11/2008

Appraisal: 09/05/2008 Restructuring(s): 06/23/2010 11/17/2011

Approval: 10/07/2008 Mid-term Review: 12/31/2009

Closing: 12/31/2010 12/31/2012 C. Ratings Summary C.1 Performance Rating by ICR

Outcomes: Moderately Satisfactory

Risk to Development Outcome: Moderate

Bank Performance: Moderately Satisfactory

Borrower Performance: Moderately Satisfactory

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C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings

Quality at Entry: Satisfactory Government: Satisfactory

Quality of Supervision: Moderately SatisfactoryImplementing Agency/Agencies:

Moderately Satisfactory

Overall Bank Performance:

Moderately SatisfactoryOverall Borrower Performance:

Moderately Satisfactory

C.3 Quality at Entry and Implementation Performance Indicators

Implementation Performance

Indicators QAG Assessments

(if any) Rating

Potential Problem Project at any time (Yes/No):

No Quality at Entry (QEA):

None

Problem Project at any time (Yes/No):

No Quality of Supervision (QSA):

None

DO rating before Closing/Inactive status:

Satisfactory

D. Sector and Theme Codes

Original Actual

Sector Code (as % of total Bank financing)

Primary education 70 70

Secondary education 30 30

Theme Code (as % of total Bank financing)

Education for all 100 100 E. Bank Staff

Positions At ICR At Approval

Vice President: Axel van Trotsenburg James W. Adams

Country Director: Stefan G. Koeberle Joachim von Amsberg

Sector Manager: Luis Benveniste Eduardo Velez Bustillo

Project Team Leader: Ratna Kesuma Mae Chu Chang

ICR Team Leader: Ratna Kesuma

ICR Primary Author: Halsey L. Beemer

Bernardo da Cruz Vasconcellos

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F. Results Framework Analysis

Project Development Objectives (from Project Appraisal Document) The objective of the Project is to improve access to quality education in Indonesia for all children of ages 7 to 15 by strengthening school-based management and community participation, improving existing fiduciary arrangements for greater transparency and accountability of the BOS program and, consequently, bringing about better utilization of BOS funds. Revised Project Development Objectives (as approved by original approving authority) (a) PDO Indicator(s)

Indicator Baseline Value

Original Target Values (from

approval documents)

Formally Revised Target Values

Actual Value Achieved at

Completion or Target Years

Indicator 1 : Primary Net Enrollment Rates (disaggregated by gender and income quintile):

Value quantitative or Qualitative)

Total primary 91.13% Primary male 91.40% Primary female 90.85% Primary poorest quintile 90.93%

Total primary 92.34%Primary male 92.58%Primary female 92.11% Primary poorest quintile 94.25%

Total primary 92.52 Primary male 92.47% Primary female 92.56% Primary poorest quintile 92.52%

Date achieved 12/31/2007 12/31/2010 12/31/2012 Comments (incl. % achievement)

Primary net enrollment rates increased from 2007 to 2012. This analysis is based on the March round of SUSENAS since it is the most accurate and reliable data source to analyze primary net enrollment trends over time.

Indicator 2 : Junior Secondary Net Enrollment Rates (disaggregated by gender and income quintile)


Total Jr. Sec. 66.47% Jr. Sec. male 64.37% Jr. Sec. female 68.68% Jr. Sec. poorest quintile 53.03%

Total Jr. Sec. 68.65% Jr. Sec. male 68.55% Jr. Sec. female 68.75% Jr. Sec .poorest quintile 65.39%

Total Jr. Sec. 69.96% Jr. Sec male 68.09% Jr. Sec. female 71.95%Jr. Sec. poorest quintile 63.54%

Date achieved 12/31/2007 12/31/2010 12/31/2012

Comments (incl. % achievement)

Junior Secondary net enrollment rates have increased, especially among the poorest wealth quintile. The analysis is based on March round of SUSENAS since it is the most accurate, reliable data source to analyze this indicator trends over time.

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Indicator 3 : Dropout Rates


Total Primary 2.37% Total Jr. Sec. 2.88%

Total Primary 2.27% Total Jr. Sec. 2.37% New MoEC data: Total Primary 1.56% Total Jr. Sec. 3.19%



Dropout rates at both the primary and junior secondary levels have fallen from 2007 to 2011. No official MoEC data is available beyond 2011 but MoEC provided new information on end-targets at the time of the ICR.

Indicator 4 : Transition Rates



Total Primary 83.1% Total Jr. Sec. 89.9% New MoEC data: Total Primary 82.20% Total Jr. Sec. 97.34%



Transition rates fell short of the end of project target but the rates from junior to senior secondary have increased. No official MoEC data is available but MoEC provided new end-target data at the time of the ICR.

Indicator 5 : Average monthly household expenditure per child on education by poorest quintile


Total Primary IDR 18,2766 Total Jr. Sec. IDR 41,601

Total Primary IDR 31,270 Total Jr. Sec. IDR 58,542

N/A

Date achieved 12/31/2007 12/31/2010 Comments (incl. % achievement)

Baseline figures were updated in 2009 and no end-of-project targets were established at this time. After the 2010 Additional Financing, it was no longer monitored.

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(b) Intermediate Outcome Indicator(s)

Indicator Baseline Value

Original Target Values (from

approval documents)

Formally Revised

Target Values

Actual Value Achieved at

Completion or Target Years

Indicator 1 Percent of schools receiving BOS funds on time

Value (quantitative or Qualitative)

47.05%

N/A (explanation provided in section 2.3 of main text)

79.93%


The percent of schools receiving funds on time significantly increased from 47.05% in 2008 to 79.93% in 2010.

Indicator 2 : Percentage of schools receiving full allocation of funds based on student numbers


85.55% N/A (explanation provided in section 2.3 of main text)

93.11%


The percent of schools receiving the full allocation of funds based on student numbers increased from 85.55% in 2008 to 93.11% in 2010.

Indicator 3 : Percentage of school committees that approve annual budget plans Value (quantitative or Qualitative)


72.93%


The percent of school committees that approve annual budget plans improved significantly over the life of the project.

Indicator 4 : Percentage of School Committees that receive expenditure reports Value (quantitative or Qualitative)


64.82%


This indicator was dropped during the Additional Financing in 2010.

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Indicator 5 : Percentage of School Committees which review and approve expenditure reports



87%


This indicator was added as a part of the 2010 Additional Financing.

Indicator 6 : Percentage of schools which have a School Improvement Plan (SIP) Value (quantitative or Qualitative)


62.99%


The percent of schools with SIPs increased over the life of the project. This shows progress nationwide with the use of SIPs.

Indicator 7 : Percentage of schools with relevant procurement plans Value (quantitative or Qualitative)

N/A N/A (explanation provided in section 2.3 of main text)

71.0%


A specific numerical baseline and end-of-project target was never established for this indicator. Project documentation indicates that it was expected to increase continuously over the life of the project.

Indicator 8: Percentage of schools with BOS expenditures by category displayed on school notice board



34.01%


Although the gains have been modest, schools have increasingly displayed their BOS expenditures on their notice boards.

Indicator 9 : Number/Type of Socialization Materials Distributed


Only manual and local newspaper distributed

Wider distribution and types of materials

In 2009-2012, many socialization materials were distributed: Leaflets, posters, calendars, magazines, newspapers and websites.


The project contributed to a strong BOS socialization campaign.

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Indicator 10 : Percent of parents knowledgeable on BOS, its uses, school budgets and plansValue (quantitative or Qualitative)

71% 80%

Date achieved 12/31/2007 12/31/2010 Comments (incl. % achievement)

This indicator was dropped during the 2010 Additional Financing. It was replaced by two new indicators: (i) percent of parents who know the unit costs of BOS; and (ii) percent of parents who know the objective of BOS.

Indicator 11: Percent of parents who know the unit costs of BOS Value (quantitative or Qualitative)

4.4% 20.0% 8.2%


This target was not met. This is an indication of the need for further socialization of parents of the BOS program.

Indicator 12: Percent of parents who know the objectives of BOS Value (quantitative or Qualitative)

N/A 52.0% 57.8%


This target was met and parents were informed of the objective of BOS through socialization programs and school-based information campaigns.

Indicator 13 : Annual Consolidated Reports produced as a result of monitoring information system (MIS) improvements


N/A Annual reports produced

Annual reports produced.

Date achieved 12/31/2006 12/31/2010 12/31/2012

Comments (incl. % achievement)

This indicator was met. In 2012, systems were introduced in all schools to systematically collect student data; tools for Reporting Information and Management Systems (TRIMS) and improved complaint handling are also being used in school as of 2012.

Indicator 14 : Final process evaluation undertaken, school-based management (SBM) study completed; School Marketing Information Campaigns (SMIC) activities and survey completed.


N/A

Final evaluations undertaken and SMIC activities completed

Final evaluations undertaken and SMIC activities completed.


Achievement of this indicator is judged to have been met. SMIC and SBM reports completed and an overall BOS evaluation was underway in March 2013.

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G. Ratings of Project Performance in ISRs

No. Date ISR Archived

DO IP Actual

Disbursements (USD millions)

1 03/02/2009 Satisfactory Satisfactory 170.78 2 11/02/2009 Satisfactory Moderately Satisfactory 436.04 3 06/29/2010 Satisfactory Moderately Satisfactory 598.50 4 06/07/2011 Satisfactory Moderately Satisfactory 769.81 5 04/13/2012 Satisfactory Moderately Satisfactory 1098.50 6 09/25/2012 Satisfactory Moderately Satisfactory 1098.50 7 01/02/2013 Moderately Satisfactory Moderately Satisfactory 1098.50

H. Restructuring (if any)

Restructuring Date(s)

Board Approved

PDO Change

ISR Ratings at Restructuring

Amount Disbursed at

Restructuring in USD millions

Reason for Restructuring & Key Changes Made

DO IP

06/23/2010 S MS 598.50 Additional Financing and extension of closing date

11/17/2011 S MS 776.40 Amended disbursements percent

I. Disbursement Profile

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1. Project Context, Development Objectives and Design 1.1 Context at Appraisal

1. Country Context. At appraisal, Indonesia had a population of over 220 million and was a lower middle-income economy with a GDP per capita of US$1,920. Since the economic and political crisis of the late 1990s, Indonesia had undergone a remarkable institutional transformation with decentralization transferring responsibility for most public service delivery to sub-national governments. Indonesia had restored its macroeconomic and financial stability with prudent economic policies, as well as extremely low budget deficits. Economic growth accelerated to a 10-year high of 6.3 percent in 2007. In 2007, the growth rate was sufficient to reduce poverty from 17.8 to 16.6 percent and reverse the trend of jobless growth, with unemployment falling from 10.3 to 9.1 percent. 2. Sector Context. With over 46 million students and 2.8 million teachers in more than 227,000 schools, Indonesia had the fourth-largest education system in the world, almost similar in size to the United States. Two major ministries were responsible for managing the education system, with 82 percent of schools under the Ministry of Education and Culture (MoEC) (formerly the Ministry of National Education) and 18 percent under the Ministry of Religious Affairs (MoRA). Indonesia had almost achieved universal primary enrollment but only 55 percent of children from low-income families were enrolled in junior secondary schools. Indonesia continued to rank low in international standardized tests of student performance. In 2003, Indonesia ranked 34 out of 45 countries in the Trends in International Mathematics Science Study (TIMSS). In the 2006 Program for International Student Assessment (PISA), which looks at how well 15-year-old students are prepared for life, Indonesia ranked around 50 out of 57 countries in each of the categories of science, reading and math. 3. Indonesia sought to address structural problems in the legal and legislative framework governing education by passing laws that emphasized that all Indonesian citizens have the right to education and that the Government has an obligation to finance basic education without charging fees. Although the law and regulations were passed in 2003, it was only in 2005, with the introduction of Bantuan Operasional Sekolah (School Operational Assistance Program-BOS)1, - that schools received sufficient operational funds to waive or reduce parents’ contributions. The BOS program was, and continues to be, regarded as a key pillar of the Government’s basic education policy, as it provides funding directly to schools for school operations and uses elements of school-based management (SBM) for the implementation of the program. Specifically, the BOS program aimed to: (i) improve access to education by eliminating school fees for poor

1 BOS is a national program that involves, amongst others, Ministry of Education and Culture (MoEC); Ministry of Regional Affairs (MoRA); Ministry of Finance (MoF); National Planning Agency (Bappenas); Financial and Development Supervisory Board Internal Audit Agency (BPKP), State Audit Agency (BPK), Ministry of Home Affairs (MoHA) and selected local governments.

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students and lowering fees for other students; (ii) enhance the quality of education; and (iii) accelerate the achievement of near universal enrollment at the junior secondary school level. The BOS SBM approach was based on lessons learned from the Scholarships and Grants Program (SGP) and the School Improvement Grant Program (SIGP). These programs pioneered the provision of block grants to Indonesian schools to mitigate the impact of the Asian economic crisis on student enrollment and drop-outs. The expectation was that SBM would lead to more efficient use of resources and improved student achievement. In 2007, the Government took another step in cementing SBM and parental involvement with regulations, which further enhanced the role of school committees. 4. Project Context. The BOS-KITA project was essentially an on-budget transfer of US$1.1 billion over a four year period to support an existing nationwide government education program. The BOS-KITA project marked a shift in the Bank’s approach to investment lending focused on Education for All (EFA) goals. It was designed to support and add value to the Government of Indonesia’s (GoI) school grants program, the national BOS, in order to improve access to quality education for all children aged 7–15. The project fit within the Bank’s strategy of supporting ongoing nation-wide programs that were within the overall policy focus of the Bank. Achievement of the MDG and EFA targets as well as expanding education access to children of poor families fit squarely within the Bank’s overall strategy, and was a continuation of the Bank’s education program with Indonesia. The Bank’s funds were made available to the GoI based on: (i) the government’s compliance with the mutually agreed upon criteria stipulated in the BOS Operations Manual and (ii) supervision of BOS-KITA project activities and overall progress toward achieving the project PDOs. The Bank transferred funds quarterly to the Ministry of Finance to reimburse quarterly expenses incurred in supporting the National BOS program. The Bank’s impact on the improved fiduciary arrangements and strengthened school based management and community participation was in the recommendations made by and accepted by the GoI in the content and guidelines of the BOS Operations Manual. There was a parallel Basic Education Capacity Trust Fund Project (BEC-TF) 2 as well as the Dutch Education Support Program (DESP) 3 that provided technical assistance and supported studies, conferences, study visits focused on fiduciary and SBM issues, and workshops at the national level in support of BOS-KITA. BOS awareness-raising was supported by the comprehensive Social Marketing and Information Campaign (SMIC) funded under DESP which included national public

2 BEC-TF support included: (i) Education Policy Advice and an Education Public Expenditure Review (EPER); (ii) 2011 BOS National Training Program, design and development and materials production; (iii) District BOS (BOS-Daerah BOSDA) and (iv) the Tool for Reporting and Information Management (TRIMS) (refer to Annex 2). 3 The Embassy of the Kingdom of the Netherlands, through the Dutch Education Support Program (DESP) provided US$20 million in funding to support the BOS program. The support focused on four key components: (i) monitoring, evaluation, regional independent monitoring and complaint handling; (ii) a SMIC; (iii) training on BOS to BOS teams at the provincial, district, and school levels as well as to members of the local community; and (iv) a comprehensive study on SBM.

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service announcements, district events, school interventions and media relation activities all focused on improving the accountability of the BOS program. 1.2 Original Project Development Objectives (PDO) and Key Indicators 5. The project development objective was to improve access to quality education in Indonesia for all children of ages 7 to 15 by strengthening school-based management and community participation, improving existing fiduciary arrangements for greater transparency and accountability of the BOS program and, consequently, bringing about better utilization of BOS funds. 6. Progress toward achieving the PDO for the initial two years of the BOS-KITA project was measured against the following PDO Indicators: (i) primary net enrollment rates (disaggregated by gender and income quintile); (ii) junior secondary enrollment rates (disaggregated by gender and income quintile); (iii) dropout rates at the primary and junior secondary levels of education; (iv) transition rates at the primary and junior secondary levels of education; and (v) average monthly household expenditure per child on education by the poorest quintile. 1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification 7. The PDO was not modified during the project implementation. In June 2010, additional financing was provided for the project and at that time modifications were made to the PDO indicators: (i) the wording for the dropout rate indicator was modified from “% net dropout rates” to “dropout rate (%)”, due to a previous typing error; and (ii) the baseline value of the PDO indicator “average monthly household expenditure per student on education by poorest quintile” was increased due to a change in the calculation of the expenditure which in 2010 included registration and other fees. 8. The intermediate indicators were also modified during the June 23, 2010 Additional Financing. The first intermediate outcome—“improved management of BOS funds by schools”—was dropped and replaced by three new indicators: (i) percent of school committees that review and approve expenditure reports; (ii) percent of schools that have a school improvement plan; and (iii) percent of schools with relevant procurement plans. To assess progress for the second intermediate outcome— “increased accountability through improved public information and dissemination of BOS” — two new indicators were added: (i) percent of parents who know the unit cost of BOS; and (ii) percent of parents who know the objectives of BOS.

9. In January 2011, it was decided that the PDO indicator “average monthly household expenditure per student on education by poorest quintile” would no longer be monitored as part of the results framework due to the fact that there were too many factors outside the control of the project that could affect it.

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1.4 Main Beneficiaries 10. The targeted project beneficiaries were: 42 million primary and junior secondary students; 190,000 primary and junior public and private schools distributed in the 33 provinces of Indonesia; more than 1,000,000 teachers, 190,000 principals and over 7,000 Provincial Offices of Education (POE) and District Offices of Education (DOE) staff and directors, approximately 190,000 School Committees were to receive some form of training for their added roles in school management4. 1.5 Original Components 11. The BOS-KITA project had a single component named the “BOS Operation Assistance School Grants”. The component was to supported the provision of BOS Grants to BOS Schools to finance BOS eligible expenditures set out in the BOS Operational Manual for: (i) the BOS 2008 Program; and (ii) BOS Grants under the Project for the BOS 2009 and later programs. 1.6 Revised Components The components were not revised. 1.7 Other significant changes 12. On June 23, 2010 the Bank approved Additional Financing in the amount of US$500 million. The original Loan Agreement was amended to add the following: (i) BOS Grants under part 1 of the Project for the BOS 2010 Program; and (ii) BOS Grants under Part 2 of the Project for the BOS 2011 and later program; and (iii) a new closing date of December 31, 2012. The additional financing was to undertake activities that would scale up the project’s development effectiveness in light of: (i) implementation experience to date; and (ii) an expected greater role of school districts in monitoring and managing BOS. The underlying motivation for the Additional Financing was to move BOS-KITA from simply being a project that strengthens fiduciary requirements to one that also directly helped schools and districts make the critical link between assessing school performance, planning for improvements and using funds (including BOS funds from central and local governments) for needed improvements. School improvement planning (that incorporates expected education standards), improved monitoring, gap-financing by districts, and greater oversight by school committees was introduced under the Additional Financing to help rationalize BOS funds from largely financing teachers’ remuneration and honoraria, and redirect resources (including BOS funds) toward other school operation needs and student needs.

4 Trainings involved an intensive 3-day program to support over 650,000 participants from primary and junior secondary schools and madrasahs in 339 districts and 31 provinces to maximize the use of BOS and other school resources for improved SBM. The program focused on planning for continuous improvement of SBM through an integrated approach to introduce participants to and build core skills in: School Self-Evaluation; Planning: Annual, Budget; Financial Management and Character Building.

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13. On November 17, 2011 there was a Level 2 restructuring and the Loan Agreement was amended to increase the Bank disbursement from 40 percent to 100 percent. The amendment enabled GoI to meet the financing gap it was experiencing that year and accelerate slow disbursement at the district level. The revision did not change project development objectives, outcome indicators, or safeguard status.

14. It should also be noted that there is a discrepancy in the datasheet for the final Development Objective (DO) rating between Section C.3: “Quality at Entry and Implementation Performance Indicators” and Section G: “Rating of Project Performance in ISR”. Section C.3’s rating for DO is “satisfactory” and is based on the analysis of the September 2012 ISR. In December 2012, a final ISR was prepared, which downgraded the DO rating to “moderately satisfactory” but was not archived until two days after the project closed. Given that section C.3 only records the last DO rating of an active project, the final ISR rating as archived in January 2013 was not registered by the system. Section G reports all ISR ratings and therefore reflects the final analysis, which is in line with the analysis of this ICR but differs from the information recorded by the system under Section C.3. 2. Key Factors Affecting Implementation and Outcomes 2.1 Project Preparation, Design and Quality at Entry. 15. Project Preparation. In 2008, and prior to project preparation, the GoI identified an overall financing gap in their development budget. This gap became the basis for the proposed overall loan amount. Once the amount of the loan had been agreed, GoI and the Bank worked together to develop the BOS-KITA project. Critical to the preparation process was a thorough review of the effectiveness of the BOS program itself. To this end, the Bank preparation team prepared and used a number of assessments5 conducted both internally and by other international organizations working in Indonesia such as the Asian Development Bank (ADB) and USAID. The Bank preparation and appraisal teams consisted of technical experts that were appropriate for the development of the project. The preparation of the project was also spread over several months which were devoted to an informed policy dialogue with the MoEC and MoRA, other ministries, academia, NGOs and other donors, school stakeholders and community members. The BOS-KITA

5 Some eight background papers were produced amongst which the more critical were: “Assessment in Preparation for BOS-KITA”: Agustina, Cut Dian, Zaki Fahmi, Elif Yavuz (2008); and “Investing in Indonesia’s Education: Allocation, Equity, and Efficiency in Public Expenditures”: Arze del Grando, Javier, Wolfgang Fengler, Andy Ragatz and Elif Yavuz (2007). Additionally, some sixteen additional sources were used extending from local and international studies on SBM to UNESCO and USAID reports on EFA issues and implementation of other donor supported education projects in Indonesia. These assessments systematically documented the early results and challenges of the BOS program and as such were important for the development of the BOS-KITA project. A BOS Program Assessment (April 2010) was carried out to inform the Additional Financing request.

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project benefitted from a series of parallel and complimentary trust funds such as the BEC-TF and DESP. 16. The policy dialogue that the task team had during preparation also facilitated modifications in the BOS Operations Manual. This was important because the BOS Operations Manual was the key instrument used to guide the overall implementation of the BOS program. The early discussion strengthened the financial arrangements for the disbursements of the block grants directly to schools and clarified the expenditure categories upon which the grant funds could be spent. The preparation team examined critical risks such as: (i) the fact that other modes of funding could marginalize the innovations of the BOS grants; (ii) effective school based management and community participation may fail to materialize; and (iii) through BOS, the Bank could undermine decentralization by supporting a central government program, which should ideally be implemented thought district governments and identified mitigation measures. A thorough economic and financial analysis as well as a detailed study of international experience in school grants and SBM was completed as part of the project preparation process. Lessons were also learned from the SGP and the SIGP both of which pioneered the provision of block grants to Indonesian schools to mitigate the impact of the Asian economic crisis on student enrollment and dropouts. In addition, lessons were learned from the Community Driven Development (CDD) project which contained several successful examples of community involvement which indicated that social pressure from an informed local community could be a positive influence on reducing corruption and misuse of funds. The preparation process was thoughtful, collaborative, and technically sound, and to the extent possible, based on lessons learned from previous operations. 17. Project Design. The strategic relevance and approach in project design were appropriate. The project was fully consistent with the FY09-12 Country Partnership Strategy (CPS) for Indonesia that focused on the fact that the Bank’s program should be on core engagements, through which the Bank would support the Government’s own programs, blending Bank financing more directly in support of successful ongoing government programs. Education was one of the Bank’s core sectoral engagements and the BOS-KITA project was seen as a new way of working in Indonesia, starting with an existing, effective GoI owned program for which Bank involvement could add value. The project aimed at promoting good fiscal practices at the district and school levels, and increased parental participation and community involvement to strengthen accountability and transparency in the management of resources targeted to education. The project remains fully consistent to the current CPS (FY12-15) with its focus on supporting ongoing GoI programs in core strategic areas with education being one of these areas. 18. The BOS-KITA development objective appropriately reflected the GoI’s goals for the national BOS program with the addition of a PDO focus on improved fiduciary arrangements and strengthened school based management and community participation. SBM was intended to give schools broad authority to design, implement, and manage their educational programs and classroom instruction in accordance to local social norms and culture. The results framework appropriately mirrored the national level indicators since the project was to contribute to the national program. The design team also decided

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to use a specific investment loan (SIL), utilizing IBRD funds, rather than a development policy loan (DPL), because the loan was to finance a determined expenditure program in the education sector and did not support a set of specific policy actions. As mentioned, the risks were realistically identified, and mitigations strategies were developed with the use of BEC-TF6 funds to ensure that the BOS-KITA development objectives would be achieved. Since the project did not support specific policy actions, the loan was disbursed based on quarterly Interim Financial Reports (IFRs) from the Ministry of Finance (MoF). The design also limited project expenditures to categories identified in the BOS Operations Manual 7 which was to be reviewed annually by the Bank for the appropriateness of expenditures. In 2010, the project design was judged to be appropriate and useful and the GoI requested an additional US$500 million to continue the BOS-KITA. The project design remained the same with the exception of a few modifications to the results framework. 19. Quality at Entry. The BOS-KITA project underwent an extensive and thorough Quality at Entry (QER) process. In June 2008, the Project Concept Note Review (PCN) meeting endorsed: (i) the concept of a SIL as opposed to a DPL operation; and (ii) the use of block grants as a mechanism to channel funds from the central government directly to schools, but stressed that the team must provide greater detail of the controls which would be in place for monitoring, evaluation and audit measures as well as eligible expenses in the context of Bank disbursement requirements. The meeting also provided the team with guidance to: (i) be more explicit in Bank documents as to the effectiveness of the BOS program; (ii) emphasize the value added by the Bank, especially tied to the Bank’s CPS and the implementation of BOS; (iii) develop an appropriate supervision strategy for sampling the use of funds, linked to a robust assessment framework; (iv) further develop anti-corruption measures; and (v) increase focus on fiduciary control mechanisms, which needed to be in place for the project. 20. In June 2008, the project underwent a quality enhancement review and the following key points arose from the discussions to guide the preparation team as it prepared for the Regional Operations Committee (ROC) meeting: (i) the BOS-KITA project could be used to improve the outreach and socialization of the existing BOS program by implementing a social marketing and information campaign; establishing an independent monitoring unit; and strengthening SBM; and (ii) the project could look at the Bank-supported National Program for Community Empowerment Project (PNPM)

6 The BEC-TF supported extensive analytical and training activities directly related to such issues and financial management at the district and school level, building on the exiting SMB system, and making recommendations on the financing mechanisms available to central government in implementing the BOS program. 7 The BOS operations manual, issued by the MONE, details: (i) criteria for BOS school participation; (ii) the list of BOS eligible expenditures; (iii) implementation arrangements at the BOS school, district, province and central government levels; (iv) BOS grant agreement mechanisms; (v) financial reporting and auditing requirements at each governmental levels; (vi) monitoring, supervision and reporting requirements; (vii) complaints handling and sanctions, and (viii) information campaigns.

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project that used a similar block grant mechanism with the support of some 7,000 facilitators at the field level and build on that model; (iii) IFRs for grants disbursed to schools would be the basis for disbursements, thus IFRs needed to be certified; (iv) the BOS Operations Manual and audit reports for the previous 3-4 years had been reviewed by the FM team against the Central Operations Support Office framework and were found to be working reasonably well although with room for improvement; and (v) the BOS-KITA program should disburse based on documentation verifying the transfer of grants to schools. 21. In July 2008, the proposed project underwent a ROC which: (i) endorsed BOS-KITA as central to the CPS and that BOS-KITA would operate in conjunction with BEC-TF, focusing on improved service delivery and strengthened institutions; (ii) agreed that the key question for support would be whether the Government was satisfactory in terms of performance and fiduciary arrangements; and (iii) asked the team to revise the PAD to included information on an effective financing mechanism for the BOS, the strengths and weaknesses of BOS, justification on the basis and timing of Bank disbursements, information on how school based management leads to reduction of corruption and increased accountability, and ensure that the Risk Identification was focused and concise.

22. The task team incorporated the majority of the recommendations from the three reviews into the final PAD. Based on the findings present above, the ICR rates quality at entry to be satisfactory. 2.2 Implementation 23. Project implementation began with effectiveness on November 11, 2008. The initial disbursements were made by the GoI and by December 2009 and 100 percent of first year’s allocation had been disbursed. The BOS manual that had been reviewed and approved during preparation was distributed to schools in February 2009. The DESP trust fund provided support for the training on the manual for schools and stakeholders at all levels which was conducted from March until April 2009. Subsequently, the BOS operations manual was reviewed annually and the Bank and GoI made revisions when appropriate to direct the implementation of the overall BOS program.8 These annual reviews of the manual were particularly important since the manual was and remains the key element to the overall implementation of the BOS program and the chief opportunity for the Bank to discuss related policy issues. (See Annex 2 for a full description of the evolution of the project manual.) In February 2009, the first DESP trust fund-supported

8 Examples of modifications to the BOS manual were: (i) guidelines that stipulated that school committees must have a community representative on the school committee to ensure transparency and wider community participation; (ii) the inclusion of earmarked funds specifically for “remedial teaching” rather than lumping it together with sports, art and scouts; (iii) clarification of the sub-district roles, and the BOS audit procedures; (iv) inclusion of an information gathering tool for the “safe schools” and refurbishment of disaster retrofitted schools, an outgrowth of BEC-TF supported activities; and (v) instructions on how to carry out budgeting and school improvement plans.

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Regional Independent Monitoring (RIM)9 survey took place in targeted locations that assessed the school operational grant program. In November 2009, the Bank supported the Government’s initiative to establish an inter-agency working group to fully discuss key implementation issues under BOS and review how best to achieve the desired goal of the education policies articulated within the BOS program. School based-management was also moving forward. School committees were formed with parents and other local community representatives in an effort to promote greater transparency. The school committees were elected as required and they were being viewed as integral to the management and oversight of schools. These committees provided inputs on school educational policy and programs. They were also being trained on BOS procedures alongside school staff and they approved annual budget plans. Schools were also preparing school improvement plans that were reviewed and approved by the committees. The BOS funds were received by schools and being managed with the involvement of a board of teachers and community stakeholders10. 24. On June 23, 2010 the Bank approved an US$500 million in Additional Financing. The Bank and the GoI took the opportunity to increase the project’s focus on school based management and increased management of BOS by local governments. 11 Additionally, the Bank and MoEC revised the BOS Operations Manual to clarify allowable and unallowable expenditures, and capped the level of BOS funds that could be used for honoraria at the school level at 20 percent. In 2011, MoEC, supported by the World Bank, AusAID, ADB and other development partners, developed the “2011 BOS Training Program” that was designed to provide school supervisors, school BOS teams, and school committee members training on planning, managing and monitoring on the

9 The RIM survey was designed to assess six important aspects of BOS: (i) funds allocation and disbursement; (ii) funds utilization; (iii) transparency and information disclosure; (iv) monitoring and complaint handling; (v) socialization; and (vi) school committee roles and functions. The RIM survey process covered a total of 2,160 schools in four phases. Data gathered and reported by the RIM surveys, because of its wide coverage and in depth information gathering methods, became a critical source of useful monitoring data allowing for greater accuracy on measuring baseline values and subsequently progress indicators for the project. 10 See World Bank. Indonesia: Implementation of School-Based Management in Indonesia, April 2012, for a full and detailed analysis of SBM in Indonesia. This RAND study, funded by DESP, was one of the first assessments made of the SBM system in Indonesia and is a major research product to come out of the BOS-KITA, BEC-TF and DESP collaboration. 11 A sample of the agreed additions follows: (a) clarification on the role of schools in terms of taxation (retail and on honoraria) and use of interest earned on BOS funds; (b) local governments advised to allocate local BOS to meet gaps in financing school operations; (c) enhanced coordination for the internal audit of BOS by IG-MoEC and all local governments in 2010 and beyond; (d) posters listing BOS objectives, BOS unit costs, eligible and ineligible expenditures and the role of SCs, to be provided to all BOS recipient schools; (e) BOS allocations per annum for each school advertised in local newspapers; (f) publish names of purchasing teams as part of the record of purchasing information; (g) training school committee members to review and approve school budgets, purchasing procedures and cashbooks and expenditure statements; (h) training school BOS teams and SCs in School Improvement Plans;; and (i) financial management of BOS, complaints handling and information disclosure.

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utilization of BOS funds in accordance with the BOS Operations Manual as well as school self-evaluation, annual planning and budgeting. AusAID provided funds for the roll-out of the training and the reproduction of the training materials and monitoring and evaluation. This was an effort to train school management teams on the BOS processes as well as socialize communities and schools to the overall BOS program and objectives. 25. In 2011, implementation began to slow down. This was due to modifications that the government made to the way that BOS funds were channeled. Originally, BOS funds were channeled through a decentralized mechanism to education office at province level and then transfered to schools as block grants. Beginning in 2011, BOS funds for public schools became part of the district budget and subject to MoHA financial management procedures and MoF mandated DIPA12 line item budgeting thus curtailing the budget flexibility inherent in block grants. BOS funds for private schools were in the form of a block grant, managed by the District Finance Office (DFO). Funds for private schools were channeled from the National Treasury (KUN) to the District Treasury (KUD) and then to schools as block grant while funds to public schools were channeled from the State Treasury to districts and then to schools. This change crearted confusion and by February 2011, transfers of BOS funds slowed to the extent that only 22 percent of funds had been distributed and 86 percent by March 30, 2011. This was a marked reduction in the speed of distribution compared to the first two years of the project. In May 2011, the Bank supervision mission downgraded financial management to moderately unsatisfactory because of the delayed transfers and inability of districts and school staff to use the unfamiliar MoHA financial procedures.

26. In November 2011, after intensive reviews of: (i) the 2011 implementation; (ii) the constraints faced by schools and districts; (iii) findings from RIM surveys/other World Bank assessment results; (iv) inputs from Parliament; and (v) criticism from the community and media, MoEC confirmed that the 2012 BOS funds distribution would resume through the Provincial government using a block grant mechanism, for both public and private schools. An inter-ministerial working group was established chaired by BAPPANAS to put in place strategies to remedy the situation, provide further clarification about BOS and to support its ongoing improvement. The 2012 BOS guideline for the new system was signed by MoEC, MoF and MoHA in December 2011. With this mechanism back in place, disbursements improved considerably, with 100 percent of 2012 first quarter funds disbursed by mid-January 2012. At this point, the Bank raised the financial management rating to moderately satisfactory. The Bank’s proactive involvement at this time was important in providing a rapid response analysis of the issues on the funds flow and presenting options to the GoI on how these issues might be resolved.

12 DIPA - Preparation and Ratification of Budget Allocation List (DIPA) (Daftar Isian Pelaksanaan Anggaran.) The DIPA is the MoF budget allocation system which specifies government financing of activities by line item and by fiscal year.

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27. The National Audit Bureau (Badan Pengawasan Keuangan dan Pembangunan - BPKP) issued its 2011 BOS Audit Report based on analyzing data from 193 of the 497 districts and gave a qualified opinion, raising the concerns that: (i) implementation of control systems at the district level showed weakness; and (ii) reliability of internal control systems could not be fully verified. These findings reflected problems which arose from the new procedures introduced in 2011 for the decentralization of BOS funds disbursements. The BPKP audit made several recommendations dealing with the allocation process, implementation, reporting and school fees. There were no reported losses of funds by the audit.

28. There were five Bank supervision mission from the period August 2009 through October 2012. The makeup of the Bank’s teams was well balanced with financial management staff well represented on missions (especially after the 2011 BOS audit report was issued), along Implementation of the BOS-KITA project completed and all US$1.1 billion was fully disbursed 8 months before project closing on December 31, 2012. 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization 29. Design. The BOS M&E design included BOS management teams at the central, provincial and district levels. The internal monitoring was meant to be a detailed supervision process whereby teams also participated in resolving the problems they uncovered. External monitoring was conducted by the MoEC’s research and development agency, with a focus on evaluating program implementation, identifying systemic weaknesses, and generating recommendations for improvement of the program. Through the use of BEC-TF grant funds, the Bank provided technical assistance and capacity-building support for data quality and management, and utilizing results in policy-making. Integrity and reliability of government data was also a concern identified in the analysis of BOS, and thus BOS-KITA included a third-party data quality audit conducted by independent monitors with recommendations for improvement. 30. The PDO level indicators for the BOS-KITA project were appropriately aligned to the GoI’s goals for the national BOS program and the intermediate indicators were tied to the project’s PDO goals of strengthening school-based management and community participation, improving existing fiduciary arrangements for greater transparency and accountability of the BOS program and improving the efficient utilization of BOS funds. At the time of the Additional Financing in 2010, the PDO indicators remained the same (except for indicator #5, as explained above) and additional intermediate indicators were added in order to better gauge the achievement of project objectives at the school, school committee, parent and community levels. Again, the intermediate indicators were linked to project investments, and the data collection responsibilities clearly articulated. 31. The independent third-party data quality review through independent monitors was also an appropriate design element. In order to ensure objectivity and integrity of information about the progress of the BOS-KITA project, a RIM system was set up. RIM monitors conducted surveys at the district and school level and provided both the Bank

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and the government implementation teams with timely data. This survey was complemented by analysis undertaken for by the World Bank on school based management in primary schools.

32. Implementation and Utilization of Monitoring and Evaluation. The implementation of the BOS-KITA project was supported by the use of findings from the annual SUSENAS surveys, triennial SUSENAS education modules, MoEC data, and RIM and SMIC surveys. At the time of project design, it was agreed that the July round of SUSENAS data would be used for measuring net enrollment rates at both primary and junior secondary levels (PDO indicators 1 and 2). However, in mid-2012, it was determined by the Bank, that the March round of SUSENAS data was the most reliable source for measuring net enrollment rates over time. Therefore, the baseline values for indicators 1 and 2 reported in the ICR come from the March round of SUSENAS. Moreover, the associated end-of-project targets were derived by applying the same calculation method originally used by the project preparation team to derive the end of project targets using the July round of SUSENAS. This was done in order to ensure that the results were comparable over time. PDO indicators 3 and 4 were not affected by the Bank’s finding since these were sourced from MoEC’s Education Statistics in Brief 2008-2011. However, MoEC provided new end-target data for indicators 3 and 4 at the time of the ICR, which are the ones being used for the analysis in this report. In addition, the Bank’s findings did not impact Indicator 5 since it was sourced from the triennial SUSENAS education module and, as mentioned previously, after the 2010 additional financing, this indicator was no longer officially monitored because there were too many exogenous factors that could impact its value. 33. As mentioned above, intermediate indicators were tied to the project’s PDO goals of strengthening school-based management and community participation, improving existing fiduciary arrangements for greater transparency and accountability of the BOS program and improving the efficient utilization of BOS funds. The sources for these indicators were as follows: (i) intermediate indicators 1-8 were sourced from the RIM survey; (ii) intermediate indicators 9, 13, and 14 were based on qualitative assessments and/or field visits; and (iii) intermediate indicators 10-12 were sourced from the SMIC survey. However, it should be noted that the baseline values for the intermediate indicators 1-8 were not initially based on RIM survey since the first round of results were not available at appraisal. Moreover, there were multiple sources of data (BPK, BALITBAG, EQCPI base line study etc.), that were used to establish baselines and end-of-project targets, some of which did not continue through project implementation. Because of the multiple data sources used, there was no single methodology to derive end-of-project targets for indicators 1-8. Once the RIM was available, the Bank team relied on these data. The RIM data for 2008, 2009 and 2010 was appropriately weighted in order to provide reliable, robust and comparable measures for assessment of the indicators 1-8 over time for this. ICR analysis.

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2.4 Safeguard and Fiduciary Compliance 34. Safeguards. The BOS program did not finance civil works and procurement was limited to small quantities of school consumable supplies and teaching and learning materials purchased by the primary and junior secondary schools. Therefore, the BOS program did not trigger any of the Bank’s safeguard policies and was classified as an environmental category “C” project. No other safeguard policies were triggered. 35. Fiduciary Compliance. As mentioned previously, MoEC was responsible for implementing the project under the BOS-KITA project. The MoEC fiduciary management capacity was satisfactory for the implementation of the original project and the restructured project according to OP/BP 10.02. By project closing, there were no outstanding Financial Management Reports (FMRs) and MoEC was fully compliant with the submission of the quarterly interim financial reports (IFRs). As stated above, the 2011 BOS Audit Report gave a qualified opinion, raising issues about implementation of control systems at the district level and financial report differences between MoF and MoEC. However, there were no reported losses of funds. The BPKP audit made several recommendations and MoEC followed up at the provincial and district levels. Based on the audit findings and to mitigate similar challenges in the future, the GoI in 2012 changed the BOS funds transfer mechanism: instead of transferring funds from districts to schools, they would be released from provincial levels directly to schools. The new mechanism was spelled out in MoHA regulation No. 62/2011 (Permendagri No. 62/2011) and “Guidelines of BOS management”. The final audit report is in the process of being completed and is due by June 30, 2013. The limited project procurement was conducted in accordance with Bank policies and procedures with no procurement issues raised during implementation. 2.5 Post-completion Operation/Next Phase 36. The continuation of the national BOS program is a political and programmatic priority of the GoI and MoEC. It seems highly likely that the financial portion of the BOS program will continue given the GoI’s fiscal commitment of 20 percent of the government budget focused on education. The GoI has asked that the Bank, on an informal basis, to continue to work with the MoEC in the refinement of the BOS Operations Manual which should mean that programmatic priorities developed during the BOS-KITA project will be included in the ongoing BOS program. The BEC-TF ICR reports that the district level Capacity Development Plans (CDPs) with their focus on strengthening management at the district level contain within them budgets to continue the CDP outline activities beyond the closing of the BEC-TF project.13 Although there is

13 The overall objective of the BEC-TF program was to contribute to the Government of Indonesia’s (GoI) achievement of the Millennium Development Goals (MDGs) and Education for All (EFA) goals through good governance in education. Within this context, the BEC-TF sought to strengthen the planning, budgeting, financial management and accountability at the local level in order to reduce leakages, increase the efficiency of fund usage, and improve the delivery of education services. The BEC-TF project also

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no next phase planned for Bank involvement in the BOS program, the Bank’s support during the last four years of BOS operations has been substantial and the momentum in the BOS program can be expected to be sustained over the medium term. The project design of BOS-KITA which supported the GoI to strengthen financial management procedures with transparency and accountability (e.g. eligible expenditures). These features will enable the sustainability of project impacts.

3. Assessment of Outcomes 3.1 Relevance of Objectives, Design and Implementation 37. Relevance of Objectives. The project objectives are highly relevant to the Bank’s current pro-jobs engagement in the current CPS (FY13–15). The current CPS supports the strengthening of the overall governance and management of the education system to improve education quality and performance of teachers, and expects that these activities will improve economic development results. The Government of Indonesia continues to support the Five Year Medium Term Strategic Plan (RENSTRA) to promote higher quality of management of primary and junior secondary education, and the BOS program is central to carrying forward this national strategy. The GoI has taken steps to sustain both financial and administrative arrangements in the BOS program central financing mechanisms, and refinement of the guidelines and procedures for ensuring that the quality, efficiency and efficacy of the intergovernmental transfer programs now supporting both districts and schools. The project development objectives are appropriate and are closely linked to Indonesia’s national education and MDG goals. 38. Relevance of Design. The relevance of design is rated substantial. The design with a single project component was in full alignment with the October 2003 CAS framework of contributing to improving governance at the primary and junior secondary education levels. The design of the project was to provide support to the existing nationwide BOS program through on-budget transfers to reimburse government expenditures in the BOS program of categories agreed to by the GoI and the Bank. The project was also seen by the GoI as central in taking forward the reforms embedded in their multi-year strategic plan (RENSTRA) which focused, among other aims, on increasing the financial and budgetary capacity at the recently decentralized district and school levels. The BOS program was and continues to be central to the GoI’s priorities in providing increased access to quality primary and junior secondary age children and achieving the MDG goals. The design used other donor trust funds to encourage increased accountability at the local levels through strengthening school based

envisioned developing a sound monitoring and evaluation system capable of providing relevant data to guide and inform the decision-making process across the entire education system.

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management and financial management activities as well as initiating a robust independent monitoring survey system. 39. Relevance of Implementation. Relevance of implementation is substantial. All planned activities were completed and disbursements were at 100 percent eight months before the project closed. However, there were challenges to overcome, including delays caused by the modifications to the funds flow in 2011. This was rectified in 2012 with the return to the Provincial block grant program which had been successful in the first two years of the BOS-KITA project. The Provincial block grant mechanism appears to be appropriate given the current level of decentralization and the capacity of districts to manage the local education system. 3.2 Achievement of Project Development Objectives 40. Assessment of PDO Indicators. The PDO indicators show positive trends for enrollment, dropout and transition rates. This is a substantial achievement because they are reflective of the national goal of meeting the MDGs and are directly tied to the project’s objectives. The intermediate indicators, which were strongly tied to project interventions, also showed gains over the life of the project. Schools in all 497 BOS-supported project districts show good progress in meeting the project development objectives. 41. The PDO Indicators. Progress toward achieving the PDOs was measured against the following PDO indicators.14 The achievements are as follows: primary net enrollment rates nationally increased from 91.13 percent in 2007 to 92.52 percent in 2012. The disaggregated gender data associated with this indicator shows mixed results. Primary female net enrollments surpassed the target by 0.45 percentage points while primary male net enrollment rates missed the target by 0.11. Primary net enrollment rates for the poorest quintile increased from 90.93 percent in 2007 to 92.52 percent in 2012 missing the target by 1.73 percentage points. Despite missing the end-of-project target, the increase in net enrollments for the poorest quintile, shows that the government has made progress in reaching the disadvantaged regions of the country and is judged to be significant given that these are the hardest to reach areas. 42. Junior Secondary net enrollment rates increased nationally from 66.47 percent in 2007 to 69.96 percent in 2012. The increases in net enrollment rates at the junior secondary level were particularly large within the poorest income quintile rising from 53.03 percent in 2007 to 63.54 percent in 2012. These gains reflect the BOS program’s success in expanding access to poor and disadvantaged children. Significant net enrollment gains at the junior secondary level among both males (rising from 64.37 percent to 68.09 percent) and females (rising from 68.68 percent to 71.95 percent) were also observed over the 2007-12 period.

14 As mentioned, indicator 5 was not monitored because there were too many factors affecting the average monthly expenditure per child on education that were outside the control of the project.

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43. Reductions in dropout rates and improvements in transition rates are also observed over the 2007-11 period. Dropout Rates: At the primary school level dropout rates decreased from 2.37 percent to 1.61 percent and at the junior secondary school level dropout rates fell from 2.88 percent to 1.80. Transition Rates: Transition rates from primary to junior secondary school also increased from 75.58 percent in 2008 to 77.26 percent in 2011. This fell short of the end-of-project target of 82.20 percent but is a positive trend nonetheless. Transition rates from junior secondary to senior secondary school also increased from 89.20 percent in 2008 to 97.93 percent in 2010, exceeding the end-of-project target of 97.39 percent. 44. Intermediate Outcome Indicators. The intermediate level indicators were closely aligned to the BOS-KITA scope and activities and in several cases the positive trends demonstrated the impact that modifications in the BOS Operations Manual made on project implementation. 15 These indicators showed significant gains throughout project implementation. The intermediate indicators are clustered under three topics and are discussed below based on the cluster design. 45. Cluster No. 1 Improved Management of BOS Funds included seven indicators:

a. On time arrival of funds at schools. The percent of schools receiving funds on time significantly increased from 47.05 percent in 2008 to 79.93 percent in 2010. As reported earlier, in 2011, the MoF changed the funds flow mechanism to give direct payments to the districts which slowed down disbursements to schools. While RIM data has been published beyond 2010 for this indicator, MOEC reports that by 2012 the flow of funds issue had been resolved and schools are now receiving funds in a timely fashion.

b. Percentage of schools receiving full allocation of funds based on student numbers. The data for this indicator shows an increase from 85.55 percent in 2008 to 93.11 percent in 2010. This is a sizable increase in the numbers of schools with accurate student-based allocations. Accuracy of funds allocation is also highlighted in the 2009 study by MoEC that indicates 93.5 percent of funds allocated in the period of July – December 2007 and January – June 2008 matched the actual number of students. This is an improvement compared to a previous MoEC study in 2006 that highlights an accuracy rate of 84.5 percent. Accuracy of funds allocation with student numbers also received a high score in the BPKP audit report with a score of 97.0 percent.

c. Percentage of school committees which approve budget plans. This indicator showed an increase from 2.81 percent in 2008 to 72.93 percent in 2010. Preliminary findings from the RIM survey conducted in 2011 suggests that most school committees participate in the planning and budgeting decisions at the school level, particularly those related to BOS. Early results indicate that the

15 The data sources used for the intermediate indicators are: (i) RIM for indicators 1-8; (ii) qualitative assessment and/or field visits for indicators 9, 13 and 14; and (iii) SMIC survey data for indicators 10-12. MoEC is reported in this section in order to provide additional evidence of the project’s achievements.

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proportion of primary school committees that participated in the school budget process increased from 67 percent in 2008 to 90 percent in 2011.16 This is a considerable achievement over the life of the project and is judged to be successful. Again, this is a reflection of the emphasis in increasing accountability and transparency at the local level, a hallmark of the SBM elements in the project. An additional aspect related to this indicator is that in 2010 the BOS operations manual was revised to require school committees to include an individual from the community as a committee member, another effort at increasing transparency and community involvement.

d. Percent of school committees that review and approve expenditure reports. This indicator was first included in 2010 and the RIM data shows that, as of 2010, 35.83 percent of the school committees review and approve expenditure reports. MoEC data, which reports on a smaller sample, indicates that by 2012, 87 percent of the committees reviewed the reports. Again, this review and approval activity was the result of revisions made in the BOS operations manual. The revisions to the 2009 Operations Manual strengthened financial disclosure and reporting requirements by mandating that school committees play a more active role in the approval of school expenditures.

e. Percentage of schools which have a school improvement plan increased from 41.59 percent in 2009 to 62.99 percent in 2010. This 20 percentage point increase shows considerable progress with the use of SIPs. School based management reforms were significantly strengthened when BOS grants were introduced. Grants under the program provided a predictable and reliable source of funding that could be used in ways that the school itself thought best to improve education outcomes. To support these improvements, the program required schools to develop 4 year development plans and translate these into annual work plans and budgets. The BOS program assigned a central role to school committees in the management and use of school grants. At each step of the process, school committees were required to participate in school planning and provide oversight on expenditure plans and reports.17

f. Percentage of schools that have relevant procurement plans. A specific numerical baseline and end-of-project target was never established for this indicator. Project documentation indicates that it was expected to increase continuously over the life of the project. The 2011 achievement of 65.66 percent (RIM data) and the reported 71 percent value reported by the MoEC are an indication of the adoption of this instruction which appears in the BOS Operations Manual. Again, this is an indication of increased management capacity developed at school levels.

g. Percentage of schools with BOS expenditures by category displayed on notice boards increased from 30.06 percent in 2009 to 34.01 percent in 2010. Although the gains are modest, schools have increasingly displayed their BOS

16 World Bank. Concept Note “Expanding education access and raising quality: Assessing the school operational grant program in Indonesia”, pg. 6. 17 Ibid, pg 6.

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expenditures on their notice boards. This indicator is important for the transparency of the school-based financial management process. The 2007 BOS Operations Manual stipulated that schools were obligated to post budget plans and report on BOS funds received on school notice board, but not the actual use of funds. The 2009 BOS Operation Manual additionally mandated that schools post records of purchasing information and use of funds on school notice boards.

46. Cluster No. 2 Increased Public Information and Dissemination regarding BOS was supported by the comprehensive Social Marketing and Information Campaign funded under DESP which included national public service announcements, district events, school interventions and media relation activities all focused on improving the accountability of the BOS program. This important initiative applies to all three indicators in this Cluster # 2:

a. Number and type of socialization materials distributed. A specific numerical baseline and end-of-project target was never established for this indicator. However, the team was able to determine that18 BOS posters and pocket books were distributed to every MoEC school in Indonesia and local district and provincial levels media, indicating proactivity on the part of the government to conduct a socialization campaign.

b. Percentage of parents who know the unit costs of BOS. This was a new indicator that was added at the time of the Additional Financing in 2010. The percentage of parents with knowledge of the unit costs of BOS increased from 4.4 percent to 8.2 percent, missing the end-of-project target of 20 percent. This target was not met indicating that the school based management process, which depends on a good level of active parent participation to be effective, still needs more work.

c. Percentage of parents who know the objectives of BOS. The data provided for this indicator shows that 57.8 percent know the objectives of BOS. This exceeded the target of 52 percent. While this was a positive development the MoEC continued to promote increased parent’s knowledge of the BOS program. In 2012 MoEC launched another socialization campaign and provided districts with posters containing the following information: (i) objectives of the BOS program; (ii) the amount of BOS received by all schools; (iii) unit costs for students at the primary and junior secondary levels of education; and (iv) description of the roles and responsibilities of school committees and parents as they relate to the effective implementation of the BOS program.

18 BOS socialization materials were distributed in the following manner: 2009—Leaflets; posters; calendars; BOS discussions in the magazine PELANGI; BOS manual distributed to journalists; NGOs; local parliamentarians; and publication in provincial newspapers of BOS allocations per school. 2010—BOS posters to every district; BOS manual; and publication in the province newspaper of BOS allocations per school. 2011—BOS leaflet and calendar to every school and BOS manual. 2012—4 BOS posters; pocket books to every school; briefs released during national media events; BOS manual; and BOS relevant information available on the BOS dedicated and secure MoEC website: www.bos.kemdikbud.go.id.

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47. Cluster No. 3. Improved Monitoring and Evaluation included two indicators: a. Annual consolidated reports produced as a result of MIS improvement. This

indicator was met. In 2012 systems were introduced in all schools that systematically collect student data. TRIMS and improved complaints handling are also being used in school as of 2012. Modifications in reporting systems and formats were introduced in the revised 2011 BOS project manual.

b. Final process evaluation and special studies undertaken, SBM study completed, SMIC activities and survey completed. Achievement of this indicator is judged to have been met. The SMIC and SBM reports were completed and an overall BOS evaluation was underway in March 2013.

48. As the intermediate indicators illustrate, the BOS Operations Manual, and the Bank’s role in assisting in updating and approving the final results of any modifications, was of substantial significance in taking forward the project’s PDOs related to school-based management and community participation as well as improving the existing fiduciary arrangements at the school and district levels. 19 Greater transparency and accountability were also taken forward by improvements in financial management and budgeting. The monitoring of all indicators through the manual were tied to PDO values. As mentioned, the Bank’s role in reviewing and approving the BOS Operations Manual through discussions with the government was of singular importance in the initial design, its implementation, and assessing the eventual success of the project and its PDOs. 3.3 Efficiency 49. Positive Trends in Key Education Indicators and Internal Efficiency Gains. The BOS national program—which received on-budget support from the Bank’s BOS-KITA project and capacity building and technical assistance from the DESP and the BEC-TF program—has contributed to the positive gains observed within the education sector between 2007 and 2012. Net and gross enrollment rates at the primary and junior secondary levels of education increased during this period. The increases in net enrollment rates at the junior secondary level are particularly large within the poorest income quintile (rising from 53.03 percent in 2007 to 63.54 percent in 2012). Internal efficiency gains have also been observed over this period, evidenced by: (i) increased completion rates at the primary and junior secondary levels; (ii) increased transition rates from primary school to junior secondary school; (iii) reduced drop-out rates at the

19 The revisions introduced to the BOS Operations Manual in 2009 strengthened community oversight over the usage of BOS funds by expanding the membership of the of school management teams by including a parent representative. Prior to these updates only principals, treasurers and teachers were allowed to be members of the school committee team. The revisions to the Operations Manual also strengthened financial disclosure and reporting requirements by mandating that schools post the amount of BOS funds received and spent, eligible and ineligible expenditures, procurement plan and procurement activities on their school notice boards. Prior to 2009, schools were only required to post budget plans and record the amount of BOS funds received on their notice boards—not the actual executed expenditures. These new guidelines were introduced in order to increase the transparency in the use of funds at the school level.

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primary and junior secondary levels; and (iv) reduced repetition rates at the primary and junior secondary levels.

50. Returns to Education. The BOS program, supported through the BOS-KITA project, continues to generate important economic gains; both private returns to individuals and public gains to Indonesian society. Because of BOS/BOS-KITA, children are able to attend school and pursue their education to higher levels of schooling. Using survey data on individual characteristics—including highest degree obtained and labor earnings—private returns to education are estimated by comparing an individuals’ expected wage across the various levels of education. The updated analysis reveals that there is a strong positive relationship between an individuals’ level of schooling and their expected yearly income. The total and marginal returns to primary and secondary school remain high within the Indonesian labor market, providing a strong economic justification for the GoI’s public investment in basic education.

51. Private Gains from Increased Enrollment at the Junior Secondary level. Increased net enrollment rates at junior secondary levels have also been observed since the launch of the BOS-KITA project.20 The private gains resulting from such an increase are estimated by contrasting the Net Present Value (NPV) of the direct and indirect costs borne by individuals who complete three additional years of education, to the benefits in terms of increased expected earnings for all the additional students who make the transition to the junior secondary level. The updated analysis reveals that the private gains associated with making the transition from primary to junior secondary school are substantial. A 1 percent increase in enrollment at the junior secondary level is projected to generate an aggregate net private gain of approximately US$12.45 million.

52. Savings from Reduced Repetition Rates at the Primary and Junior Secondary levels. The main channel through which the BOS program and the BOS-KITA project have contributed to decreasing repetition rates at the primary and junior secondary levels is by increasing the quality and relevance of teaching and learning at the school level and by providing targeted support to students from the poorest income quintile—those who typically are more likely to repeat or drop out of school. Using the latest available data on the public and private cost of providing schooling to each pupil per year, it is possible to estimate the avoided cost to the education system and to Indonesian households from decreasing repetition rates. The updated analysis reveals that a decrease in repetition rates by 1 percent is estimated to generate public and private savings of US$132.51 million at the primary level and US$66.45 million at the junior secondary level.

20 Official MoEC data also shows that transition rates from primary to junior secondary school have increased from 75.58 percent in 2008 to 77.26 percent in 2011.

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3.4 Justification of Overall Outcome Rating 53. The objective and project design were highly relevant in that they fit squarely into the government’s multi-year strategic plan program. The relevance of implementation is judged to be substantial because all the funds were disbursed and the Bank and government worked effectively to resolve the delays in transfer of funds to schools. The efficiency of the project was substantial because the BOS program and the BOS-KITA project continued to generate important economic gains; both private returns to individuals and public gains to Indonesia society. Moreover, lower levels of financial leakage within the education system are observed as a result of the GoI’s overall efforts at strengthening external and internal audit systems as well as the BOS-KITA increased focus on improving financial management, transparency and accountability at the local level. However, the 2011 problematic disbursement process led to delays in the delivery of funds to schools and the BPKP 2012 national audit which found weaknesses in the financial management mechanism results in an overall rating of moderately satisfactory.

Original Project Project Relevance Achievement of PDO (Efficacy) Efficiency Overall Rating Substantial Moderately Satisfactory Substantial Moderately Satisfactory

3.5 Overarching Themes, Other Outcomes and Impacts 54. (a) Poverty Impacts, Gender Aspects, and Social Development. The project, with its focus on net enrollment and transition rates differentiated by gender, provides evidence that girls’ enrollment rates at the primary and junior secondary levels increased during the project, surpassing the project targets. Net enrollments and the junior secondary level increased between 2007 and 2012 especially among the poorest income quintile, rising from 53.03 percent to 63.54 percent. In addition, the BOS national program has also provided transportation subsidies for poor students to ensure that these pupils attend school and complete their academic studies. In 2012, the MoEC reported there was a large increase in the BOS per-student allocation which reduced the fees/costs of education, because BOS manual revisions in 2012 included provision to use BOS funds for the purchase of uniforms, shoes and stationery for poor students. 55. (b) Institutional Change/Strengthening. The ongoing process of revising the BOS project manual, a process in which the Bank played a role, is illustrative of a major institutional change supported by the BOS-KITA project. (See Annex 2 for details.) How BOS grants are to be distributed, spent and reported as stipulated in the project manual guides the entire national BOS program. The GoI has asked for continuing Bank involvement in this process after the completion of the BOS-KITA project (c) Other Unintended Outcomes and Impacts (positive or negative). 3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops Not applicable.

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4. Assessment of Risk to Development Outcome Rating: Modest 56. The risk to development outcomes at project closing is rated moderate given the GoI’s political commitment to increased budgets for education and continuing fiscal commitment to fund the BOS program. As part of the GoI’s decentralization and democratization process, the BOS program is one of the GoI’s primary institutional supports for such efforts, and it is unlikely that the government’s support for the BOS program will diminish over the medium run. The allocation of 20 percent of the central government budget to education from 2009 onwards and the substantial increase in education resources that resulted from this policy change have significantly strengthened the financial sustainability of the BOS national program post BOS-KITA project. The ICR’s financial analysis reveals the program is sustainable even under a model simulation which assumes high enrollment growth and high projected BOS unit cost increases post-2012. This bodes well moving forward. Indonesia seems to be politically and financially committed to continuing the BOS program. 57. The GoI’s request that the Bank remain involved in the improvement of the 2013 BOS operations manual even after the closing of the project is a positive indicator of the usefulness of the Bank’s involvement in this critical activity and reflects the GoI’s continual requests for the Bank’s analytical and rapid response capability. The development of such tools as the BOS Complaints Handling system, TRIMS and SupportMySchool 21 have provided local schools and communities with increased capacity to monitor and evaluate the quality of efficiency of school development programs. Such involvement, whether by parents or community leaders, is important in assuring transparency and accountability at the school level. 58. The risk assessment and rating undertaken during preparation and the mitigation measures were realistic. Some of the risks were rated as moderate (BOS, a central government program, might weaken the efforts for decentralization) turned out to be

21 Tools developed include: (i) the BOS Complaint Handling System supports the Law 14/2008 on Public Information and the implementation of Indonesia’s Open Government Action Plan 2012 within MoEC’s goals of promoting transparency, participation and accountability in the implementation of the BOS program. Complaint handling relies on community participation to provide feedback from beneficiaries in the field (community, schools, districts, and provinces, central). It is also a mechanism to support transparency and participation in education service delivery and effective/efficient governance. (ii) TRIMS is an evidence-based education policy instrument, introduced to all schools nationally in 2011 as part of education management information systems reforms to support reliable and timely data collection and reporting.(iii) SupportMySchool is an online reporting system that allows members of the public and the school/university community, as well as local government and MoEC personnel, to report on critical needs within schools and universities, so that these needs can be systematically recorded and resolved by the education system.

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negligible during implementation. Others rated substantial (misuse of funds at the school levels, M&E efforts might be slow in being developed, audit coverage may be less than adequate and procurement structures and procedures might not be properly in place) accurately depicted potential risk areas and warranted continuing close scrutiny during the project. Through the 2009 and 2011 BOS Training, a national government initiative, capacity development programs took place and the project equipped districts with increased financial management and reporting skills. These capacity building activities, as well as the continuing scrutiny of the GoI’s audit agencies, have lessened the reported leakage of national level funds at the local levels (See Annex 3). These capacity development activities, supported by both GoI’s funds as well as the BEC-TF project, provide mitigating actions which have lessened the financial risks identified during project preparation. 5. Assessment of Bank and Borrower Performance 5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry 59. Bank performance at entry is judged to be satisfactory. The Bank preparation team worked effectively with the GoI and particularly MoEC in the development of the project. Extensive time was devoted to tailoring project activities around the existing BOS national program. The Bank team worked with the GoI in revising the BOS operations manual, a Loan Agreement compliance requirement, which set the parameters of how the BOS program was to be managed at the provincial, district and school levels, defining the categories within which BOS funds could be spent at the school level, and the mechanisms that school principals and school committees were to use to manage and report on the use of BOS funds. There was an extensive quality review process for the project and the thorough preparation process made it possible for the government to satisfactorily comply with the conditions of effectiveness within a short period. 60. Two task team leaders were responsible for the entire project preparation cycle and one of them continued her responsibility into the implementation process thus providing continuity to the timely implementation and completion of all the key project preparation activities that were required. Considerable time was spent by the task team in discussions with the government in an effort to ensure agreement on the strategic goals of the GoI as well as the CAS goals and project development policies of the Bank. (b) Quality of Supervision 61. The Bank task team provided strong continuous leadership for the project, particularly in the discussions with MoEC, BAPPENAS and the MoF related to: (i) the improvement of the BOS Operations Manual, (ii) the potential impact of the 2011 changes in the funds flow policies and their return back to the Provincial Block Grant mechanism in 2012, (iii) the analysis of project progress as evidenced in the use of RIM data, (iv) the development of the 2009 and 2011 BOS Training, (v) the use of BEC-TF and DESP funds to support some of the BOS program activities, and DESP funds to improve the BOS Complaints Handling system, Monitoring and Evaluation system,

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SMIC, as well as the implementation of a SBM study, and (vi) resolving issues raised by the 2011 BOS Audit. 62. Through intensive communication, meetings, attending & participating in BOS national coordination meetings, the Jakarta based task team kept in constant contact with the project implementing agency. This approach contributed significantly to the collaboration between the Bank and the GoI team, in addition to formal supervisions. Mission findings were related to the GoI and Bank management in a timely manner and the task team followed up on their recommendations. The Jakarta-based staff was critical in following up on compliance with agreed tasks between missions. The Bank’s supervision missions were instrumental in working with the GoI and MoEC to resolve financial management issues raised by the BOS 2011 Audit. 63. The Bank consistently monitored the results framework using various sources of data to report year over year project progress. The main challenge at the PDO level stemmed from the fact that the July round of SUSENAS was not the most robust source to measure net enrollment rates over time. Another challenge resulted from the fact that there were multiple data sources used to calculate the intermediate indicators 1-8 baselines and end of project targets. Moreover, it was determined by the Bank team, after project closing, that these indicators had not been properly weighted/calculated during project implementation. However, at the time of the ICR review this issue was rectified with the recalculation of RIM data thereby providing the needed information to measure project achievements. For this reason, this ICR rates quality of Bank supervision as moderately satisfactory. (c) Justification of Rating for Overall Bank Performance Based on the findings above, including the challenges of data sources and use, the Bank performance is rated moderately satisfactory. 5.2 Borrower Performance (a)Government Performance: moderately satisfactory 64. The GoI was fully committed to implementing and financing the BOS program throughout the BOS-KITA project, and was responsive to recommendations in relation to revisions of the BOS Operations Manual. The GoI’s return in 2012 to the Provincial Block Grant funds flow system for the BOS program demonstrated a quick and positive response to a problem that had delayed disbursements in 2011. An Inter-Ministerial Working Group was established to put in place strategies to remedy the situation, provide further clarification about BOS and to support its ongoing improvement. The BPKP also undertook an annual audit of the BOS which was important for ensuring the appropriate financial management of the project. (b) Implementing Agency or Agencies Performance 65. The GoI’s implementing agency of the BOS-KITA project for the first two years was the Directorate General for Management of Basic Education (DGMBE). The

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implementation unit for the last 2 years was the Directorate General of Primary and Secondary Education (DSGPSE). The implementation unit that worked directly with the Bank team most often was the Central Project Implementation Unit (CPIU). CPIU’s role focused on coordination, facilitation, mentoring and problem solving, evaluation and reporting, and, coordination between line ministries and the Bank, provinces and districts. Facilitation included the development, along with the Bank, of changes of the BOS Project Manual, verification of documents, disbursement of grants and preparation of reports. CPIU also conducted monitoring and evaluation activities up to 1-3 times each year using improved monitoring instruments, established and institutionalized in the BOS Complaints Handling system, and conducted national BOS campaigns as a continuation of the SMIC activities funded by DESP. MoEC as the implementing agency, and more specifically the CPIU, worked diligently to try to find a solution to the 2011 days in the flow of funds to schools, and assisted the Inter-Ministerial Working Group in its work on this subject. The CPIU carried off these tasks well and were able to maintain project implementation momentum in the face of bureaucratic hurdles placed in front of them. Based on this analysis the performance of implementing agency is rated moderately satisfactory. (c) Justification of Rating for Overall Borrower Performance

Based on the findings above, overall Borrower performance is rated moderately satisfactory.

6. Lessons Learned 66. Lesson 1. Good and reliable data are essential for monitoring and evaluating new approaches to the delivery of education services. The BOS-KITA project design included the RIM survey (financed by the DESP trust fund) to be able to monitor the impact of the government’s decentralization process which was an excellent design feature. However, the project would have benefitted by receiving the DESP funds prior to implementation so that a RIM baseline survey could have been conducted prior to implementation. This would have provided a robust data set for ongoing project monitoring and evaluation. Results must also be synchronized with the end-of the project so that achievements are measured with the most up-to-date information. 67. Lesson 2. The efficient and timely BOS disbursements to schools are contingent upon establishing and maintaining a clear funds flow mechanism. The BOS program suffered substantial delays because of a changing in the funds flow mechanism, depending on institutions and staff members who were ill-prepared for their responsibilities; poorly formulated decisions from central government; conflicting regulations (MoEC vs. MoHA); districts and schools were not prepared with the necessary skills and capacity to develop the very detailed and inflexible annual budgets. Adequate capacity building at both institutional and staff levels, is critical if major shifts are to be made in how money flows from the center to local levels in a major national program such as BOS.

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68. Lesson 3. On-budget Bank support for a government program allows leveraging limited Bank financing into overarching national sector investments. Bank technical assistance and guidance on the BOS Operations Manual had greatest impact on improved existing fiduciary arrangements, funds flow, school-based management and increased community participation in BOS activities throughout Indonesia.

7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies See Annex 7 for Government comments.

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Annex 1. Project Costs and Financing (a) Project Cost by Category (in USD Million equivalent)

Category Appraisal Estimate

(USD millions)

Actual/Latest Estimate (USD

millions)

Percentage of Appraisal

Loan: IBRD 75910 BOS Grants 2008 248.5 181.6 73% BOS Grants 2009 350.0 416.9 119%

Front End Fee 1.5 1.5 100% AF Loan: IBRD79060

BOS Grants 2010 177.9 177.9 100% BOS Grants 2011 322.1 322.1 100%

Total Baseline Cost 1,100.0 1,100.0 Total Project Costs 1,100.0 1,100.0

Front-end fee IBRD 1.5 0.0

Total Financing Required 1,100.0 1,100.0

(b) Financing

Source of Funds Type of

Cofinancing

Appraisal Estimate

(USD millions)

Actual/Latest Estimate

(USD millions)

Percentage of Appraisal

Borrower 2,021.5 9,090.0 450% International Bank for Reconstruction and Development – Original and Additional Financing Loans

1,100.0 1,100.0 100%

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Annex 2: Outputs by Component. 1. The Project Development Objective (PDO) of BOS-KITA is “to improve access to quality education in Indonesia for all children ages 7 to 15 by strengthening school- based management (SBM) and community participation, improving existing fiduciary arrangements for greater transparency and accountability of the BOS program and, consequently, bringing about the better use of BOS funds”. 2. In addition to the School Operational Grants program (BOS), the Government of Indonesia (GoI) is conducting a range of other initiatives which contribute to its goal of access and universal basic education for the poor and the lowering of education costs generally. These include: Local Government subsidies to supplement BOS; strategies to reach out-of-school children (District, School, Community); new school construction; special funding allocations (Dana Alokasi Khusus – DARK) for: new classrooms and classroom rehabilitation, equipment for teaching and learning, and library books; scholarships programs for the poor; pre and in-service teacher competency development and training, through Teacher Working Groups (Kelompok Kerja Guru – KKG; Musyawarah Guru Mata Pelajaran – MGMP) to address learning issues of students at risk ‟ and help them progress through the education system”. 3. Under the BOS-KITA project, grant funding has been facilitated through the DESP and the Basic Education Capacity Building (BEC) Trust Funds. The grants provided technical advice and capacity building support for policy analysis to strengthen school based management (SBM), financial management, transparency and accountability and fiduciary arrangements. 4. Complementary Development Partner projects are also supporting the BOS program: AusAID and European Union: Education Sector Support Program’s Principal and Supervisor Competency Development; AUD 26 million grant to support the 2011- 2012 nation-wide School BOS Management Team training and evaluation, as part of the nationwide system of professional development program for principals and supervisors; UNICEF’s support to MoEC’s School Based Management Secretariat; Asian Development Bank’s Minimum Service Standards project and support to the 2011- 2012 nation-wide School BOS Management Team training; and USAID’s Decentralized Basic Education project: Technical advisory support in the design of the 2011- 2012 nation-wide School BOS Management Team training. 5. The BOS-KITA project provided direct budgetary support to the Indonesian Government’s (GoI) Bantuan Operasional Sekolah (BOS) national program. The BOS-KITA loan reimbursed a portion of the GoI’s BOS expenditures and was designed to improve access to quality education by strengthening school-based management and community participation by improving existing fiduciary arrangements for greater transparency and accountability. This was to be achieved through direct financial support to the ongoing BOS national program and through revisions and updates to the BOS Operations Manual. The Bank’s funds were made available to the GoI based on the

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government’s compliance with the mutually agreed upon criteria stipulated in the BOS Operations Manual.

The types of changes made to the BOS manual between 2009 and 2012 based on the requirements of the Bank were as follows: 6. Changes in the BOS Manual 2009 were: (i) obligating school to also post the use of BOS funds on school notice boards; (ii) including Bank’s Anti-Corruption Guidelines; (iii) providing simple guidelines on procurement of goods, including the need for a procurement team consisting of three persons, at least one of whom is a parent representative from the local community; (iv) signing-off expenditure reports by school committees ; and (v) adding an online platform to promote information flows on school conditions and resolve complaints. 7. Changes in the BOS Manual 2010 were: (i) obligating schools to post records of purchasing information and use of BOS funds on school notice boards; (ii) including a community member is the BOS school committee; (iii) reviewing expenditure reports by school committees; and (iv) developing minutes of school budget plan (RKAS) development meetings.

8. Changes in the BOS Manual 2011 were: (i) limiting honoraria expenditures to 20 percent; (ii) instituting guidelines to hire teachers along student: teacher ratios (as stated in the Regulation of the Minister of National Education No. 15 Year 2010 on Minimum Service Standards for Primary Education at the Regency/City Level); and (iii) increasing focus on the role of the School Committee with regard to the school plan, school reports and expenditure.

9. Changes in BOS Manual 2012 were: (i) including active and creative learning activities for improving the quality education as an eligible expenditure; (ii) including mobile internet access as an eligible expenditure; (iii) including purchase of electricity power, besides generator sets, as an eligible expenditure; (iv) including student desks and chairs as an eligible expenditure, if the existing ones are severely damaged; and (v) informing students’ parents in writing about BOS funds receipts and uses each semester.

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The following is a summary of the key developments in BOS since the launch of the BOS-KITA project in 2008. Summary of Key Developments in BOS

BOS Program in 2008

End of Project

Target of BOS with WB

support

Actual Achieved 2012

Financial Management Release of funds

Delay has been reduced but can vary between 2-4 weeks

Delay reduced to 1-3 weeks

By 2010, 79.93 percent of schools received funds on time, a considerable improvement over the 2008 figure of 47.05 percent. Although final RIM figures have not been released, feedback from MoEC suggests substantial delays in 2011 in funds release to schools following GoI’s decision to channel resources through the districts instead of the provinces. By 2012, funds were once again channeled through the provinces and anecdotal information suggests that the on-time release of funds to schools have again considerably improved. Therefore, an overall improvement in the timely release of funds to the schools since the launch of the BOS-KITA can be noted.

Use of Funds Eligible expenditures defined 22

Capacity building on financial recording and reporting at schools

The BOS Operations Manual was improved as part of project activities and based on collaborative efforts between the Bank and government teams. In terms of “use of funds”, the manual was modified in 2011 to limit the proportion of a BOS grant being used for temporary teachers (“honoraria”) to 20 percent to increase the grant’s impact on learning or developmental needs of at risk children. This decision was based on RIM data showing that 30 percent of BOS grants were being used to cover honoraria or hiring teachers. The final RIM survey was only completed in 2011 and no final data was available at the time of the ICR. Therefore, an assessment of the decision to limit the use of BOS grants to improve fund

22 The eligible expenditure categories were: spending for new students, purchasing of new textbooks, funding extra-curricular activities, examination activities/learning activities, purchasing daily supplies, subscriptions and services (electricity, phone, etc.), building maintenance, honoraria, training for teachers, transportation subsidy for poor students, BOS management, dormitory or housing, and learning/teaching media and materials. The ineligible expenditure categories were: long term savings with the purpose of earning interest, to lend to a third party, to finance an activity that is not a school priority, to pay a bonus, transportation or clothes that are not related to the interest of the pupils, to undertake a major rehabilitation of a building, to construct a new building/room, to buy material/equipment that does not support the teaching-learning process, to invest in shares, and to finance any activity that is already financed from central or regional government sources.

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availability at the school level to finance non-personnel and other operating costs cannot be confirmed. However, field visit data and MoEC reports suggest that the GoI’s cap of 20 percent for honoraria has been complied with.

Allocation per school and accuracy of fund allocation based on student numbers

Allocation per school is centrally determined on a per capita basis. RIM data for 2008 shows 85.55 percent of schools allocate funds on a per capita basis.

Allocation per school is centrally determined on a per capita basis. RIM data for 2010 shows 93.11 percent of schools allocate funds on a per capita basis.

Although fund allocation is still derived at the central level based on a per student basis, a new formula was set to be used for the 2013/14 school year: The unit cost allocation for small and remote schools would change to more closely accommodate those schools with low student enrolment numbers. Furthermore, fund allocation accuracy based on student numbers has improved between 2008 and 2010.

Internal Audit Pre-BOS-KITA, there was limited coordination between the Inspectorate General (IG) and local government auditors. By 2008, the IG agreed to collaborate with local auditors in producing audit reports

Strengthened government capacity to collaborate with local government auditors to produce timely and accurate audit reports.

Internal audits carried out by IG, MoEC and local government auditors were undertaken across all 33 provinces in Indonesia. Findings from this exercise suggest that internal audit systems must be further strengthened although the coordination between IG and local government audits has improved considerably over the life of the project.

External Audit

Pre-BOS-KITA, the government only carried out performance audits. By 2008, it was agreed that the external audits would cover both the financial and performance audits of the project.

BPKP has audited the project in accordance with terms of reference agreed to at appraisals, covering: (i) financial and performance audits; and (ii) an emphasized review of internal controls, eligibility of school-level expenditures and their compliance with the BOS

The BPKP audits for 2008, 2009 and 2010 resulted in unqualified opinions. The final 2011 BPKP audit completed in 2012 gave a “Qualified” opinion for the program due to a difference in the total amount having been transferred to schools as listed in the financial report vs. audit result. This difference amounted to IDR3.6 trillion (US$382.3 million) but a thorough review showed that the difference was due to weaknesses in district reporting not fund misuse with financial implications.

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Operations Manual.

Transparency and accountability in the use of funds at the school levels

Pre-BOS-KITA, there was limited guidance on how BOS allocations at the school level were to enhance transparency and accountability.

(i) Reports of use of funds posted on school notice boards; and (ii) inclusion of the Bank’s Anti-Corruption Guidelines in manuals.

The 2007 BOS Operations Manual stipulated that schools must post budget plans and report on BOS funds received on school notice boards, but not the actual use of funds. As part of the Operations Manual updates mentioned previously, a requirement was added in 2009 for schools to post purchasing records and use of funds on school notice boards as well. According to RIM data, the percentage of schools posting BOS expenditures by category on school notice boards slightly increased from 30.06 percent to 34.01 percent between 2009 and 2010. Preliminary, unofficial findings from the RIM survey conducted in 2011 suggests that most school committees participate in the planning and budgeting decisions at the school level, particularly those related to BOS. Early results indicate that the proportion of primary school committees that participated in the school budget process increased from 67 percent in 2008 to 90 percent in 2011

Procurement Goods Procurement of

good and books through shopping

Provision of simple guidelines

Procurement of goods, including books, by schools was carried out in accordance with Operations Manual guidelines.

Works By community participation

Provision of simple guidelines

No procurement of works was carried out under the project.

Purchasing team

The purchasing team was the same as the existing school team

Purchasing Teams established and consisting of three persons, at least one being a parent representative from the local community

After 2011, the purchasing responsibility became part of the School Management Team’s tasks due to greater involvement by the community, which also led to increased transparency. However, any shopping above IDR 10 million thresholds still required District Office procurement committee approval.

School Governance Role of school committees (SC)

Involvement in planning, particularly in support of poor students

SC have additional role to sign off expenditure reports.

By the end of the project, the percentage of SCs that approve annual Budget Plans was reported to be 87 percent, and the percentage of schools with School Improvement Plans, reviewed and approved by SCs, had improved substantially. There is limited evidence that the SCs had a substantial role in planning support of poor students at schools.

Complaint handling (CH)

Toll-free phone and e-mail for complaints continued but no systematic

A SMS system is added and staff hired to better record follow-up and

An improved CH system was launched in 2012. It provides a streamlined approach to monitoring and investigating allegations of funds misuse. Its website and dedicated SMS number is well publicized. The system development was

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keeping of records regarding follow-ups and rate of resolution.

resolution information.

supported by the DESP team and the Bank’s Governance and Anti-Corruption team.

Sanctions Sanctions (e.g. demotion of position, relocation etc.) specified in a manual. There is evidence that sanctions are being applied.

Additional staff for monitoring of sanctions for serious non-compliance

There is no reported evidence of sanctions being applied, nor of additional staff being assigned to monitor serious non-compliance.

Monitoring Monitoring exists but needs to be strengthened. There exist: (i) provision of financial reporting forms; and (ii) independent monitoring (by NGOs and press) due to high visibility of the process.

Clarified responsibilities for monitoring through provision of technical assistance financed by the Bank, and includes a study on independent monitoring.

RIM was established through DESP funding: This independent survey was meant to: (i) provide an independent quantitative and qualitative assessment of BOS implementation in all 33 provinces; (ii) monitor BOS implementation at all levels of government and schools; and (iii) use the RIM experience to help determine the feasibility of establishing an independent monitoring system for BOS. RIM covered 2,160 schools and was carried out in four phases up through the end of the project. The RIM survey was designed to access five important aspects of BOS: (i) fund allocation and disbursement, (ii) fund utilization; (iii) transparency and information disclosure; (iv) monitoring and complaint handling; and (v) socialization. Furthermore, districts have an increasing role in education data collection and report that BOS-related work has increased, along with higher school enrolments. The monitoring team consists of the BOS Management Team, School Supervisor and at times, the Provincial Education Office and the local Parliament. The expanded role of the Supervisor is to support and monitor the school (using the improved monitoring and evaluation instrument) in all aspects of school operations, the teaching and learning program and verifying student numbers.

School Based Management - SBM Important to the implementation of the BOS-KITA was its support of school based management (SBM) in all BOS supported school. In 2003, the Indonesian government began to decentralize the governance of its primary and secondary education system as part of its decentralization of responsibilities to district governments in order to strengthen the country’s democratization processes. Schools were given authority to manage their operations independently according to student needs and were asked to engage the local community to improve the quality of education. This decentralized form of school management became known as “SBM”, and required a major shift in how people thought about schooling and improvements in the capacity of principals, teachers, and the community to provide leadership, develop programmatic alternatives to meet local educational needs, and engage parents and the community in the governance of schools. The Indonesian version of SBM was intended to give schools broad authority to design, implement, and manage their educational programs and classroom instruction in accordance to

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local social norms and culture. However, ultimate authority of hiring civil service teachers (pegawai negeri sipil - PNS) remains with the central government. Although operational authority was devolved to schools, schools were mandated to establishing SCs whose functions included giving input on school educational policy and programs, budget plans, and teacher training; increasing society’s attention and commitment to quality education; motivating parents to participate in the children’s education; collecting money in support of education; and supervising education policy and program implementation. To promote transparency, SC members were to be elected and broadly representative of the community. SBM to be supported in schools under the BOS program

SBM developed at the village and school level in order to participate in planning, monitoring and budgeting activities in support of the school plans.

School committees actively involved in planning, monitoring and budgeting activities especially in review of School Improvement Plans and procurement decisions.

At project closing, provincial and district SBM is strengthened with an increased number of schools involving the SCs, parents and the community in school planning, budgeting and monitoring. Increased monitoring and evaluation and socialization activities are noted with increased numbers of stakeholders involved in school monitoring, including the media and NGOs. There exists some indication that SCs are increasingly involved in developing School Improvement Plans and taking part in procurement decisions. SBM reforms were significantly strengthened when BOS grants were introduced in 2005. Grants under the program provided a predictable and reliable source of funding that could be used in ways that the school itself thought would best to improve education outcomes. To support these improvements, the program required schools to develop 4 year development plans and translate these into annual work plans and budgets. The BOS program assigned a central role to SCs in the management and use of school grants. At each step of the process, SCs were required to participate in school planning and provide oversight on expenditure plans and reports.

School Supervisor Training

School supervisors’ role is to move from top down examination of teachers and schools to more supportive role of supporting teachers and schools in their efforts to improve quality

Increased monitoring and evaluation role to be developed by School Supervisor Training

Central, provincial and district BOS Management Teams are providing ongoing training for School Supervisors to increase the effectiveness and quality of BOS monitoring. Financial management capacity is still reported as low by the sampled provinces. Additional training is needed to build capacity.

SupportMy School - SuMS (Bantu Sekolahku)

Develop and deploy an online reporting system that allows the public and the schools/universities, as well as local

International experience is brought to Indonesia to help design an online reporting mechanism.

The Bank provided funding to bring international best practices in using ICT and public participation to Indonesia. It aimed to increase transparency and accountability of the educational bureaucracy in responding to schools’ infrastructural and human resource needs. Since its launch in December 11, 2012, Bantu Sekolahku has been accessed by 4,293 users and over 1,000 unique needs have been reported. MoEC is slowly beginning to regularly

35

government and MoEC personnel, to report on critical needs within schools and universities.

use the SuMS.

School Reporting – General

Increase the responsibility and capability of schools to report on all aspects of their programs

All schools are required to prepare quarterly reports using the template provided in the BOS Operations Manual. Each year, they must collate these reports and submit them to districts by January 5th of the following year. Starting 2013, the BOS manual includes an additional form which breaks down the expenditure report based on the 13 BOS eligible expenditure classifications.

School Reporting – TRIMS

A local school based information gathering and reporting systems did not exist prior to the BOS program

Development of an evidence-based education policy instrument as envisioned by MoEC

TRIMS was developed to: (i) strengthen information systems and develop the capacity of key stakeholders to collect, analyze and use the resulting data for informed decisions on education policy and allocation of resources; and (ii) improve governance (transparency and accountability) by increasing availability and accessibility of education data and information. TRIMS uses a standalone Excel-based application designed to link with national data collection systems. On demand, training was provided to schools and districts focusing on improving organizational and institutional capacity to manage information systems for improved evidence-based policy making, planning and budgeting. TRIMS reduced the time it takes to collect and report information from as much as 6 months to less than two months.

WAPIK Program Knowledge sharing Best Practices

No institutional method existed at the start of the project

Knowledge and learning about good practices in teaching practice, education management and leadership is shared.

Building on the work of UNICEF’s ‘Mainstreaming Good Practices Program, WAPIK’ serves as a repository for educational innovation at various levels of education service delivery. The WAPIK is used to enhance access to information to promote quality education by: (i) increasing access to and (within the education community) building a platform/medium for sharing good practices; (ii) strengthening the culture of good practice through identifying relevant examples, developing/writing case studies for dissemination through the site; and (iii) establishing a commitment to sharing good practices at the local as well as national level and sustaining the website through GoI and Teacher Training Institute Regional Hubs.

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Annex 3. Economic and Financial Analysis 1. The BOS-KITA project provided direct on-budget support to the BOS program. The economic and financial analysis of the BOS-KITA project is therefore situated within the broader context of the BOS national program.23. The BOS program and the BOS-KITA project continue to generate important economic gains; both private returns to individuals and public gains to Indonesian society. The first source of these gains is through increasing the lifetime earnings of those children who, because of BOS/BOS-KITA, pursue their education to higher levels of schooling. Using the latest available data, the Net Present Value (NPV) of private gains continues to exceed the direct and indirect costs of basic education. Additional benefits include public and private savings from reduced repetition rates at the primary and junior secondary level and reduced financial leakage due to improved financial management, transparency and accountability at the local level. An updated analysis also indicates that the BOS national program is projected to be financially sustainable after the end of the BOS-KITA project. 2. Positive Trends in Key Education Indicators and Internal Efficiency Gains. The BOS national program has contributed to the positive gains observed within the education sector between 2007 and 2012. As Table 1 illustrates, net and gross enrollment rates at the primary and junior secondary levels of education increased between 2007 and 2012. The increases in net enrollment rates at the junior secondary level are particularly large within the poorest income quintile (rising from 53.03 percent in 2007 to 63.54 percent in 2012). Internal efficiency gains have also been observed over the 2007 to 2012 period, evidenced by: (i) increased completion rates at the primary and junior secondary levels; (ii) increased transition rates from primary school to junior secondary school; (iii) reduced drop-out rates at the primary and junior secondary levels; and (iv) reduced repetition rates at the primary and junior secondary levels.

23 Since the BOS-KITA project reimbursed a portion of the Government of Indonesia’s (GoI) BOS national program, no disaggregated data specific to the BOS-KITA project is publicly available. The economic and financial analysis provided by the ICR team must therefore be carried out in relation to the GoI’s national BOS program.

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Quantifying the Economic Value of the BOS National Program/BOS-KITA Project 3. Returns to Education. The BOS national program and the BOS-KITA project have provided schools with the financial resources needed to cover non-salary operational expenses24. The increased operational budgets at the school level and the targeted financial support to poor students have increased supply and demand for basic education in Indonesia. The BOS national program and BOS-KITA project continue to generate significant private returns to individuals who purse their education to higher levels of schooling. Using survey data on individual characteristics—including highest degree obtained and labor earnings—private returns to education are estimated by comparing an individuals’ expected wage across the various levels of education. As Table 2 illustrates, there is a strong positive relationship between an individuals’ level of schooling and their expected yearly income. The total and marginal returns to primary and secondary school remain high within the Indonesian labor market, providing a strong economic justification for the GoI’s public investment in basic education.25. Furthermore, in the absence of the GoI’s investment in education through the BOS national program, Indonesian society as a whole may under-invest in basic education, not only because the poorest households face financial constraints but also because private investment decisions fail to take into account the social returns and externalities of basic education.

24 As of 2012, Indonesia’s Ministry of Education and Culture (MoEC) estimates that BOS funds represent approximately 80 percent of non-salary operational resources at the school level.

TABLE 1: Progress in Achieving Higher Order Education Outcomes since the launch of the BOS‐KITA/BEC‐TF

Higher Order Education Indicators Baseline dataMost recent

data

Change (percentage

points)

Net enrollment rate at primary school (SD) level* 2007 2012

National average (%) 91.13 92.52 1.39

Poorest income quintile (%) 90.93 92.52 1.59

Net enrollment rate at junior secondary school (SMP) level* 2007 2012


Poorest income quintile (%) 53.03 63.54 10.51

Completion rate at primary school (SD) level** 2008 2011


Completion rate at junior secondary school (SMP) level** 2007 2011


Transition rate from primay school (SD) to junior secondary school (SMP)** 2008 2011


Drop‐out rates** 2007 2011

Primary school (SD) level (%) 2.37 1.61 ‐0.76

Junior secondary school (SMP) level (%) 2.88 1.80 ‐1.08

Repetition rates** 2007 2010

Primary school (SD) level (%) 3.81 3.58 ‐0.23

Junior secondary school (SMP) level (%) 0.53 0.35 ‐0.18

Source and notes: World Bank staff calculations. *Calculated figures are based on the March round of SUSENAS. **Calculated

figures are based on MoEC data.

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While the latter benefits are difficult to quantify in monetary terms, they further highlight the relevance and importance of the BOS national program/BOS-KITA project. Table 2: Returns to Education in 2010, by level

Level of education obtained

Average yearly wage (Rupiah)

Adjusted yearly wage (Rupiah)

Total returns by level (%)

Marginal returns by level (%)26

No education 7,096,956 7,096,956 0 0

Primary 9,572,146 8,566,026 20.70% 20.70%

Junior secondary 13,829,256 10,797,373 52.00% 31.3%

Senior secondary 16,838,940 12,213,861 72.10% 20.1%

Tertiary 28,267,200 14,967,480 110.90% 38.8%

Source and notes: World Bank staff calculations based on Sakernas 2010. The base (reference) education level used in the regression model was defined as “less than completed primary.” The adjusted yearly wage figures were derived by multiplying the average yearly wage for “no education” by the estimated earnings coefficients within each level of education (primary, junior secondary, senior secondary, and tertiary). As such, the adjusted yearly wage figures represent the share of wage which is determined exclusively by the level of educational attainment. The total returns are then calculated in relation to “no education”, while the marginal gain reflects the expected benefit from completing each additional level of education. 4. Private Gains from Increased Enrollment at the Junior Secondary level. Increased net enrollment rates at the primary and junior secondary levels have been observed since the launch of the BOS-KITA project. Official MoEC data also shows that transition rates from primary to junior secondary school have increased from 75.58 percent in 2007 to 77. 26 percent in 2011 (up by 1.68 percentage points). Since it is difficult to partial out the relative impact of the BOS program/BOS-KITA project on sector-wide outcomes with a high level of precision, private gains from increased enrollment at the junior secondary level are estimated under two scenarios: (i) the positive impact of the BOS program/BOS-KITA project has led to a half of one percent increase in enrollments at the junior secondary level; (ii) the positive impact of the BOS program/BOS-KITA project has led to a 1 percent increase in enrollments at the junior secondary level. The private gains resulting from such an increase are estimated by contrasting the Net Present Value (NPV) of the direct and indirect costs27 borne by individuals who complete three additional years of education, to the benefits in terms of increased expected earnings for all the additional students who make the transition to the junior secondary level. As Table 3 illustrates, a 1 percent increase in enrollment at the

26 The marginal returns per year of schooling (rather than per level as reported in Table 2) are the following: (i) Primary = 3.45 percent; (ii) Junior Secondary = 10.43 percent; (iii) Senior Secondary = 8.57 percent; and (iv) Tertiary = 9.02 percent. The annualized returns to education for levels higher than primary are given in comparison to primary. 27 The indirect costs include three years of foregone earnings. In line with the methodology used in the BOS-KITA PAD and other BOS/BOS-KITA Assessments carried out by the Bank and the GoI, the opportunity cost of junior secondary education is calculated using the assumption that 50 percent of the individuals would be working at a wage equivalent to 60 percent of the average salary in the active population with only primary schooling.

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junior secondary level is projected to generate an aggregate net private gain of approximately US$12.45 million. While these results clearly underscore the positive economic impact created by the BOS national program and the BOS-KITA project, the estimated gains calculated using the latest available data are lower than those projected at appraisal largely due to the rising cost of basic education and the falling wage premiums observed in Indonesia between 2008 and 2012.28. Table 3: Private Gains from Increased Enrollment at the Junior Secondary level

Number of students enrolled

Number of additional students

NPV of costs to households (Discounted at 10%) (Rupiah millions)

NPV of additional earnings (Over 50 years) (Rupiah millions)

Balance (Rupiah millions)

Balance (USD millions)

Estimated increase .005

11,933,560 59,668 (557,869) 617,634 59,766 6.23

Estimated increase .01

11,933,560 119,336 (1,115,737) 1,235,268 119,531 12.45

Source and notes: World Bank staff estimates. Balance figures converted from Rupiah to US dollars by using the average exchange rate in 2009 (US$1 = 9,600 IDR).

5. Savings from Reduced Repetition Rates at the Primary and Junior Secondary levels. The main channel through which the BOS national program and the BOS-KITA project have contributed to decreasing repetition rates at the primary and junior secondary levels is by increasing the quality and relevance of teaching and learning at the school level and by providing targeted support to students from the poorest income quintile—those who typically are more likely to repeat or drop out of school.29. Since it is difficult to partial out the relative impact the BOS program/BOS-KITA project has had on reducing repetition rates at the primary and junior secondary levels, total savings to the education system and Indonesian households are estimated under two scenarios: (i) the positive impact of the BOS program/BOS-KITA project has led to a half of one percent decrease in repetition rates at the primary and junior secondary levels; and (ii) the positive impact of the BOS program/BOS-KITA project has led to a 1 percent decrease in repetition rates at the primary and junior secondary levels. Using the latest available data on the public and private cost of providing schooling to each pupil per year, it is possible to estimate the avoided cost to the education system and to Indonesian

28 While total and marginal returns to primary and secondary school remain high within the Indonesian labor market, wage premiums have fallen between 2008 and 2012. As an increasing number of skilled workers enter the labor force (as has been observed in Indonesia over the last five years), wage premiums are expected to fall. 29 The BOS national program has increased the quality and relevance of education in Indonesia by providing funds for following types of activities: (i) training of teachers; (ii) purchase of new textbooks and learning materials; and (iii) development and institutionalization of extra-curricular activities. The BOS national program has also provided transportation subsidies for poor students to ensure that these pupils attend school and complete their academic studies.

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households from decreasing repetition rates. As Table 4 illustrates, a decrease in repetition rates of 1 percent is estimated to generate public and private savings of US$132.51 million at the primary level and US$66.45 million at the junior secondary level. These savings are higher than those projected at appraisal, reflecting the increase in public and private costs of schooling per pupil/per year over the life of the BOS-KITA project. The rising public and private costs of schooling in Indonesia further underscores the economic importance of ensuring that the internal efficiency of the education system (i.e. lower repetition rates, drop-out rates, etc.) is continuously improved in the future. Table 4: Savings from Reduced Repetition

Number of students enrolled

Number of

avoided repeaters

Public cost of

provision per pupil per year

(Rp)

Private cost of

schooling per pupil per year

(Rp)

Avoided cost

to the system

(Rp million)

Avoided cost to

households (Rp

million)

Total Avoided

costs (US$

million)

Estimated drop: .005 Primary 30,932,441 154,662 3,723,063 389,529 575,817 60,245 66.26 Junior Secondary

11,933,560 59,668 4,642,736 703,235 277,022 41,960 33.23

Estimated drop: .01 Primary 30,932,441 309,324 3,723,063 389,529 1,151,634 120,491 132.51 Junior Secondary 11,933,560 119,336 4,642,736 703,235 554,044 83,921 66.45

Source and notes: World Bank staff estimates. Balance figures converted from Rupiah to US dollars by using the average exchange rate in 2009 (USD 1 = 9,600 IDR).

6. Reduced Financial Leakage. Prior to the launch of the BOS-KITA and BEC-TF projects in 2008, the first Governance and Decentralization Survey (GDS1) found that approximately 70 percent of funds allocated by all levels of Government reached the school. By 2012, nearly 90 percent of the total funds disbursed by all levels of Government were received by schools.30 These lower levels of financial leakage within the education system are in part a result of the Government of Indonesia’ overall efforts at strengthening external and internal audit systems, as well as the BOS-KITA/BEC-TF’s increased focus on improving financial management, transparency and accountability at the local level. The BOS Operations Manual—which was updated and revised throughout the life of the BOS-KITA project—played a key role in minimizing the misuse of funds at the school level by: (i) clearly stipulating eligible and ineligible expenditures categories; (ii) strengthening financial disclosure and reporting requirements; and (iii) strengthening community oversight over the usage of BOS funds.31.

30 Regional Independent Monitoring Survey, 2012. 31 The revisions introduced to the BOS Operations Manual in 2009 strengthened community oversight over the usage of BOS funds by expanding the membership of the school management teams by including a parent representative. Prior to these updates only Principals, Treasurers and Teachers were allowed to be members of the school committee team. The revisions to the Operations Manual also strengthened financial disclosure and

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7. Financial Sustainability of the BOS National Program Post-BOS-KITA Project. Previous analyses conducted by the Bank and MoEC had concluded that the BOS national program would be financially sustainable so long as the GoI only introduced unit cost increases of less than 10 percent (in total) in the per pupil funding formula. However, the allocation of 20 percent of the Central Government budget to education from 2009 onwards and the substantial increase in education resources that resulted from this policy change have significantly strengthened the financial sustainability of the BOS national program post BOS-KITA project.32.

8. The financial sustainability of the BOS national program is evaluated in relation to forecasted increases to BOS program costs and the size of Indonesia’s education public expenditure envelope. Since the BOS-KITA loan simply reimburses the GoI for a portion of the BOS expenditures, it does not add to government expenditures like other standalone projects funded by the Bank. The BOS national program can therefore be considered financially sustainable provided that its share of the national education envelope is not projected to increase exponentially post BOS-KITA project. The updated financial sustainability analysis indicates that after the end of the BOS-KITA project in 2012, the GoI would not be spending significantly more on the BOS program as a share of national education spending than it did pre-BOS-KITA (around 7.5 percent), even under a model simulation which assumes high enrollment growth33 and high projected unit cost increases34 post-2012 (Table 5). Even under these high-enrollment, high unit

reporting requirements by mandating that schools post the amount of BOS funds received and spent on their school notice boards. Prior to 2009 schools were only required to post budget plans and record the amount of BOS funds received on their notice boards—not the actual executed expenditures. These new guidelines were introduced in order to increase the transparency in the use of funds at the school level. 32 From 2001 to 2009 the Government of Indonesia’s education budget increased by over 120 percent in real terms, with most of the increasing taking place in 2009, when the budget grew by 20 percent in real terms over the previous year. This rapid increase in resources was mainly driven by the constitutional amendment passed in 2002 that mandated the government to spend 20 percent of its total budget on education. The 20 percent rule was first met in 2009, bringing education spending to over 20 percent of the total budget share. 33 “High enrollment growth” in this context is defined as double the average enrollment growth actually observed in Indonesia between 2005 (the year the BOS national program was launched) and 2012 (the final year of the BOS-KITA project). Under the high enrollment growth simulation, enrollment is projected to grow at double the historical rate due to the significant positive impact of the BOS program on enrollments at the primary and junior secondary levels of education. 34 “High unit cost increases” in this context is defined as a 20 percent increase in BOS unit costs every two years.

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cost projections, the BOS national program appears to be financially sustainable post-BOS-KITA project. Table 5: Financial sustainability of BOS program post-BOS-KITA project under ‘high’ scenario (high enrollment growth, high unit cost increases, and projected budget growth)

1st yr BOS-KITA1

2nd yr BOS KITA1

1st yr BOS KITA2

2nd yr BOS KITA2

Post BOS KITA

Post BOS KITA

Post BOS KITA

Rupiah (trillions) 2007 2008 2009 2010 2011 2012 2013 2014 2015 National edu. Spending

123.3 161.7 205.0 214.0 262.0 292.3 336.6 372.8 398.8

Central edu. spending

50.8 55.3 85.0 88.6 108.4 117.5 135.3 149.9 160.4

BOS Spending 12.3 12.1 18.7 18.5 16.8 23.6 26.8 32.5 32.8 o/w BOS KITA loan 0.0 0.0 3.1 2.7 2.2 2.2 0.0 0.0 0.0

o/w GoI 12.3 12.1 15.6 15.8 14.6 21.4 26.8 32.5 32.8 GoI BOS spending as a share of education spending (percent) Share of national spending 10.0% 7.5% 7.6% 7.4% 5.6% 7.3% 8.0% 8.7% 8.2% Share of Central spending 24.3% 21.8% 18.4% 17.8% 13.5% 18.2% 19.8% 21.7% 20.4%

Source and notes: World Bank staff estimates. o/w = of which.

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Annex 4. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members

Names Title Unit Responsibility/

Specialty Lending Mae Chu Chang Lead Education Specialist EASHE Ratna Kesuma Operations Officer EASHE Nur Hidayat Operations Officer EASHE Muhammad Farman Izhar Operations Officer EASHE Santoso ET Consultant EASHD Sheila Town Operations Officer EASHE Samer Al-Samarrai Senior Education Economist EASHE Yogana Prasta Operations Adviser EACIF Yvonne Trethewey Consultant EASHD Unggul Suprayitno Sr. Financial Management Specialist EAPFM Budi Permana Procurement Analyst EAPPR Benedicta Ridati Sembodo Program Assistant EACIF

Supervision

Ratna Kesuma Operations Officer EASHE Task Team Leader

Nur Hidayat Operations Officer EASHE Muhammad Farman Izhar Operations Officer EASHE Santoso ET Consultant EASHD Samer Al-Samarrai Senior Education Economist EASHE Yogana Prasta Operations Adviser EACIF Yvonne Trethewey Consultant EASHD Unggul Suprayitno Sr. Financial Management Specialist EAPFM IGN Wijaya Kusuma Financial Management Analyst EASFM Ahsan Ali Lead Procurement Specialist EAPPR Budi Permana Procurement Analyst EAPPR Benedicta Ridati Sembodo Program Assistant EACIF Sheila Town Operations Officer EASHE Wisnu Boediono Consultant EASHE Mahargianto Consultant EASHE ICR Halsey Beemer Consultant/ICR EASHE Bernardo da Cruz Vasconcellos

Consultant/Economist/ICR EASHE

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(b) Staff Time and Cost

Stage of Project Cycle Staff Time and Cost (Bank Budget Only)

No. of staff weeks USD Thousands (including travel and consultant costs)

Lending FY 2008 13.69 54.71FY 2009 29.44 129.35

Total 43.13 184.06Supervision/ICR

FY 2009 4.62 28.39FY 2010 16.34 43.10FY 2011 20.17 57.67 FY 2012 34.81 110.19FY 2013 29.50 147.46

Total 105.44 386.81

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Annex 5. Beneficiary Survey Results Not Applicable.

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Annex 6. Stakeholder Workshop Report and Results Not Applicable.

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Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR A. Objective, design, implementation, and operational experience 1. BOS is a government program designed basically to finance non-personnel costs of basic education units by implementing agencies the Indonesian compulsory education program. According to Government Regulation 48/2008 on Education Funding, non-personnel costs are costs for educational consumables and overhead such as electricity, water, telecommunications, maintenance of facilities and infrastructure, overtime pay, transport, consuables, taxes, insurance, etc. However, there are some types of investment and personnel financing that can be financed by the BOS funds.

2. The general objective of the School Operational Assistance (BOS) program is to reduce the public’s financial burden of education within the framework of providing quality 9-year compulsory education. The particular objectives of the BOS program are to free all students at general/special public elementary and general/special/open junior high schools from school operational costs; free all pooor students from all fees in any form, in public and private schools and reduce school operating cost burden at private schools.

3. The targets of the BOS program are all general/special elementary (SD/SDLB) and general/special/open junior high (SMP/SMPLB/SMPT) schools, including One-Stop SD-SMP (SATAP) and Self-Managed Learning Centers (TKBM), both public and private, in all provinces throughout Indonesia.

4. Number of students, unit cost and total budget from 2005 to 2012 as follows:

2005 2006 2007 2008 2009 2010 2011 2012

No. Students (million)

32.9 33.6 35.2 35.9 36.2 36.5 36.6 36.6

Primary Schools-Unit Cost (US$)

26 26 28 28 44 44 44 64

Junior Secondary Schools -Unit Cost (US$)

36 36 39 39 63 63 63 79

Total Budget (billion US$)

0.46 0.92 1.09 1.12 1.78 1.79 1.80 2.6

5. Funds have been distributed on a quarterly basis, i.e. January-March, April-June, July-September and October-December Periods. There were 3 types of fund channeling from 2005 to 2012: (i) From 2005 to 2010 period, BOS funds were channeled through a decentralized mechanism to Education Office at province and then transfered to schools as block grant for all schools: (ii) in 2011 funds for private schools were channeled from

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the National Treasury (KUN) to the District Treasury (KUD) and then to schools as block grant while funds to public schools were channeled from the State Treasury to the districts and then to schools; and (iii) since 2012 funds have channeling has been changed back to funds flowing from the National Treasury (KUN) to the Provinsial Treasury (KUD) and then to schools as block grant for all schools.

6. BOS funds has been received by schools as a total amount and managed by schools with the involvement of a board of teachers and a School Committee by adopting the SBM principles as follows: (a) schools should manage funds professionally, transparently and accountably; (b) Schools should have a 4-year Medium-Term Plan; (c) Schools should draw up an annual work plan (RKT) in the form of a School Activity and Budget Plan (RKAS) of which BOS funds are integral part; and (d) the Medium-Term Plan and the RKAS should be approved by a teaching board meeting with attention paid to the School Committee’s consideration and should be legalized by the District Education SKPD (for public schools) or by the educational foundation (for private schools). 7. GoI decentralized 2011 BOS fund disbursement with separate and different disbursement mechanisms for public and private schools. BOS funds for public schools became part of the district budget and subject to MoHA financial management procedures. BOS funds for private schools were in the form of a block grant, managed by the District Finance Office (DFO). This posed significant implementation problems and delayed disbursement in every quarter with unintended negative results. Delayed disbursement negatively affected all schools and resulted in unavoidable, unrecorded borrowing from the SC, parents, school staff and/or office suppliers. 8. The 2011 late disbursements became the trigger for the mechanism to revert back to the Provinces. Central government was proactive in facilitating inter-ministerial consultations. An Inter-Ministerial Working Group was established to put in place strategies to remedy the situation, provide further clarification about BOS and to support its ongoing improvement. 9. After intensive reviews of: (i) 2011 implementation; (ii) the constraints faced by schools and districts; (iii) findings from Regional Independent Monitoring (RIM) surveys/other World Bank assessment results and policy advice; (iv) valuable inputs from Parliament; and, (v) rigorous criticism from the community and media, MoEC confirmed in November 2011, that 2012 BOS fund distribution would resume through the Provincial government using the Block Grant mechanism, for public and private schools. The 2012 BOS guideline for the new system was signed by MoEC, MoF and MoHA in December 2011. By January 19th 2012 Provinces had disbursed 100% of BOS funding to schools for first quarter. For second quarter 32 provinces had disbursed BOS fund to all schools on 20th April, except for the province of Aceh which received their funds on 27th April, while for third and fourth quarter had disbursed by 20th July and 24th October 2012.

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B. Outcome of the operation

10. Net Enrolment Rate (NER) based on the National Social Economic Survey (Survei Sosial Ekonomi Nasional – SUSENAS) data

Primary level Net Enrolment Rates (NER) is 92.52% below the end-target of 94.96% and lower than the 2007 Baseline of 93.80%

Junior Secondary Net Enrolment Rates is 69.96% higher than the end-target of 68.65%

11. Dropout and Transition Rates (based on MoEC 2011 data) Primary Drop-out Rates: 1.61% above the end-target of 1.56%. However,

Dropouts have decreased continuously since the 2006 baseline. Junior Secondary Drop-out Rates: 1.80% below the end-target of 3.19%.

Dropouts have decreased continuously since the 2006 baseline. Transition Rates from Primary to Junior Secondary: 77.26% below the end-target

of 82.20%. However, rates have fluctuated and are below the 2006 baseline of 82.03%.

Transition Rates from Junior Secondary to Senior Secondary: 97.93% above the end-target of 97.34%. Rates have been increasing since 2010 and are higher than the 2006 baseline of 89.2%.

12. Average monthly household expenditure per child on education by the poorest quintile based on SUSENAS 2009 dataset (2012 data will not be available until 2013).

For Primary: IDR31,270 For Junior Secondary: IDR 58,542 In 2012 there was a large increase in the BOS per-student allocation and it is possible that this reduced the fees/costs of education, because BOS manual revisions in 2012 included provision to use BOS funds for the purchase of uniforms, shoes and stationery for poor students.

13. Percentage of schools receiving funds on time. Fund disbursement was quarterly to the majority of schools. In 2012, those located in remote areas receive funds in two Semester installments. In FY 2012, Ministry of Finance (MoF) transferred BOS funds to Provincial Accounts at the beginning of the first month of each quarter. Provinces disbursed BOS funds to school bank accounts within 7 working days, as stipulated in the BOS Manual (i.e. 1 to 11 calendar days). The return to provincial disbursement has been a resounding success – 2012 disbursement was the fastest in the history of the program and, other grant disbursement programs in Indonesia. In Quarter 4, funds were transferred by the province to school bank accounts a week before the beginning of the Quarter. In all quarters disbursement was 100%. 14. Percentage of schools receiving full allocation of funds based on student numbers. Through 2012 mechanism all schools have received full allocation of funds according to student numbers. The Central government has allocated buffer funds at central level to add to BOS funds to certain provinces if any request is received from provinces which may have miscalculated their student data. If schools received funds based on an incorrectly low report of student numbers in 1st quarter for example, the

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province will transfer additional fund in the second quarter alternatively, if schools received more funds than is justified on student numbers, the province will subtract the funds in the second quarter.

15. Percentage of School Committees (SCs) that approve annual Budget Plans. Based on monitoring result of the central BOS management team 87% of SCs approved annual budget plans. 16. Percentage of schools that have a School Improvement Plan (SIP). Based on monitoring result of central BOS management Team 71% of SMPs had an SIP (Rencana Kerja Sekolah – RKS) and 93% had an annual School Budget Plan. In 2011 and 2012 the Government of Indonesia trained to all primary and secondary schools across Indonesia. This intensive training program (known as “2011 BOS Training”) was delivered to school and madrasah management teams, comprising principals, staff treasurers and community representatives (i.e. school committee or community member from BOS school team) from all primary and junior secondary schools (SD and SMP) and Madrasah (MI and MTs). The program has focused on building core skills in school-based management, including providing an introduction to school and madrasah self-evaluation, comprehensive training in budgeting and planning, and financial management. The training budget was funded by AusAID, the World Bank, the Dutch Government, European Union, ADB and USAID. These donors contributed in form of providing technical assistance especially in preparation step. The World Bank had a significant contributions in the preparation of training in the form of workshops, material development, training of trainers, and developing of training materials, supplying and distributing of materials in form of CD’s for all schools) 17. Percentage of schools with relevant Procurement Plans. Central BOS Management Team findings were that 71% of schools sample had a procurement plan. In general all procurement processes were found to be in line with the Project Operations Manual. 18. Percentage of schools that disclose the BOS expenditure by category on the notice board. Central BOS Management Team findings were that 78% of schools sample disclosed the amount of BOS funds received and 80% disclose expenditures. 19. Increased public information and dissemination regarding BOS. Wider dissemination of BOS socialization materials was taking place. The types of materials include: BOS information briefs released during national media events; the BOS Manual distributed to all schools and available on the BOS dedicated and secure MoEC website www.bos.kemdikbud.go.id along with other BOS relevant information (for example: BOS allocation per school, BOS Eligible Expenditure information, Director General Circulars). GoI disclosed BOS disbursement information by school on this website, starting in end of 2012. An improved complaint handling system was launched in 2012. It provides a streamlined approach to monitor and investigate allegations about the misuse of funds. It is managed and monitored by the CPIU who handle the complaint.

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20. Percentage of parents knowledgeable on BOS. Based on monitoring results of central BOS management Team 97.6 % of parents knew schools received BOS, 97.6 % of parents knew about BOS and 92.8 % of parents knew about “sekolah gratis” policy. 21. Improved monitoring and evaluation. BOS Program Managers, Schools and Communities increased their monitoring of the program in order to improve its effectiveness. Monitoring and evaluation has been generally conducted by the District BOS Management Team staffed by education office staff, school supervisors, sometimes in collaboration with the provincial office. The role of the school supervisor was expanded in 2012 following Bank input to discussions about ways to integrate BOS Program monitoring into routine school supervision; this requirement has been stipulated in the BOS Manual since 2012 22. Annual consolidated reports produced as a result of Management Information Systems (MIS) improvements. MoEC introduced the School Data Collection Database (Pendataan Sekolah) in all schools in 2012. It replaced an integrated database comprised of the School Application Package (Paket Aplikasi Sekolah – PAS), the Education Data and Information database (Pangkalan Data dan Informasi Pendidikan – PADATI). Every school has to entry to the system its students data (by name by address), teachers data and school data. 23. The World Bank in collaboration with other Development partners supported the BOS program. Some support for the BOS program, specifically from World Bank, is as follows: (a) input to BOS Manual Based on Analysis; (b) support to BOS Training preparation and training implementation; (c) conduct Regional Independent Monitoring; (d) support for the Social Marketing and Information Campaign (SMIC) in 2009 and 2011BOS training; (e) developing the complaint handling mechanism; (f) analysis of fund flow mechanism and (f) conduct studies on BOS impact. 24. In collaboration with World Bank, GoI’s CPIU and WB’s task team have been working closely. Central BOS management team has always shared issues with the Bank and requested the Bank to support government to resolve relevant issues. In the same way, World Bank’s team has also shared their recommendations/inputs to the BOS Team if there are any important findings relevant for government. The World Bank had often invited GoI’s stakeholders to participate in international events especially for promoting and sharing BOS program’s experiences. 25. Some improvements for BOS Program have been accomplished and will be always improved in the future. The BOS Program has also brought inspirations for other programs in MOEC as follows: (a) extending BOS to Senior High Schools and Higher Education; (b) synergized policy for education management and governance at sub-national level; (c) strengthening SBM to improve the quality of education outcomes and school governance; (d) reviewing school financing requirements specifically Education Unit Costs, BOS Unit Costs; (e) developing and implementing a formula-based national BOS allocation mechanism on the basis of fairness and equity; (f) establishing incentives for district financing to meet Minimum Service Standards in Education; (g) encouraging

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districts to allocate counterpart funds (BOSDA) on the basis of access, equity and performance improvement; (h) building district-level capacity and capability for results-oriented management; (i) financial management capacity and capability building for Principals and Treasurers; (j) increased parental and community oversight ; (k) valid and reliable data collection by school and by student name; (l) e-monitoring for fund distribution and (m) e-Complaint Handling

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Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders Not Applicable.

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Annex 9. List of Supporting Documents Republic of Indonesia, Ministry of Education and Culture Bantuan Operasional Sekolah (BOS) National Program – multiple years

Republic of Indonesia, Central Board of Statistics, National Socioeconomic Survey (SUSENAS), 2005.

Republic of Indonesia, Ministry of National Education, 2005. Medium Term Strategic Plan (Renstra)

Republic of Indonesia, Badan Pusat Statistik, Direktorat Diseminasi Statistik, National Labor Force Survey, 2010.

Republic of Indonesia, Ministry of Education and Culture, 2013. Implementation Completion and Results Report (ICR), School Operational Assistance – Knowledge Improvement for Transparency and Accountability (BOS-KITA) Republic of Indonesia, Ministry of Education and Culture, 2012.

“MoEC Education Statistics in Brief, 2008-2011”Republic of Indonesia, Badan Pusat Statistik, Direktorat Diseminasi Statistik, National Labor Force Survey, 2010.

Republic of Indonesia, The National Socioeconomic Survey, Survei Sosial Ekonomi Nasional (SUSENAS survey). March round 2007-2012. Jakarta,

Indonesia.di Gropello, Emanuela and Chris Sakellariou (2010).

Industry and Skill Wage Premiums in East Asia. Policy Research Paper No. 5379. Washington D.C., World Bank (2008-2011).

Regional Independent Monitoring Surveys. Jakarta, Indonesia.

World Bank. Aide memoires of missions between March 2009 and December 2012

World Bank, 2003. Country Assistance Strategy for Indonesia (CAS) ID- Report No: 27108. Washington, DC, October 2003

World Bank, 2008. Minutes of Meeting, Quality Enhancement Review, Washington, DC

World Bank, 2008. Project Appraisal Documents (PAD). Washington, DC

World Bank, 2008. Management Review Meeting (MRM) minutes

World Bank, 2008. Loan Agreement Number 7591-ID, Washington DC

World Bank, 2010. Assessment in Preparation of BOS-KITA, World Bank Jakarta-PREM/Education Department

World Bank, 2010. BOS Program Assessment, Jakarta, Indonesia

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World Bank, 2010. Project Paper on a Proposed Additional Loan. Washington, DC

World Bank, 2010. Additional Financing Loan Agreement, Washington DC

World Bank (2010). Making BOS Effective Under Decentralization. Policy Brief

World Bank. 2010. BOS Programme Assessment in Preparation for BOS KITA Additional Financing. Jakarta.

World Bank, 2011. Restructuring Paper on Proposed Project Restructuring of Indonesia-BOS Knowledge Improvement for Transparency and Accountability Project, Washington DC

World Bank and MONE 2011. The BOS Review

World Bank, 2012. Country Partnership Strategy (CPS) for Indonesia for the Period FY13 – 15, December 13, 2012 Report No. 72906-ID.

World Bank, 2012. Public Expenditure Review Spending More or Spending Better: Improving Education Financing in Jakarta, Indonesia

Puncak JayaPuncak Jaya(5030 m)(5030 m)

ObiObi

CeramCeram

BuruBuru

SULAWESISULAWESISUMATERASUMATERA

BaliBali

KALIMANTANKALIMANTAN

RabaRaba

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TimikaTimika

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PaluPaluJambiJambi

MataramMataram

BandungBandungSurabayaSurabaya

SemarangSemarang

PalembangPalembang

PekanbaruPekanbaru

PalangkarayaPalangkaraya

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Denpasar

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Jayapura

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PontianakPekanbaru

Yogyakarta

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Bandjarmasin

PalangkarayaPangkalpinang

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INDONESIA

NANGGROE ACEH DARUSSALAMSUMATERA UTARARIAUSUMATERA BARATJAMBIBENGKULUSUMATERA SELATANLAMPUNGBANGKA-BELITUNGBANTEND.K.I. JAKARTA

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JAWA BARATJAWA TENGAHD.I. YOGYAKARTAJAWA TIMURBALINUSA TENGGARA BARATNUSA TENGGARA TIMURKEPULAUAN RIAUKALIMANTAN BARATKALIMANTAN TENGAHKALIMANTAN SELATAN

KALIMANTAN TIMURKALIMANTAN UTARASULAWESI UTARAGORONTALOSULAWESI TENGAHSULAWESI BARATSULAWESI SELATANSULAWESI TENGGARAMALUKU UTARAMALUKUPAPUA BARATPAPUA

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INDONESIASCHOOL OPERATIONAL ASSISTANCE -

KNOWLEDGE IMPROVEMENT FORTRANSPARENCY AND ACCOUNTABILITY

PROJECT (BOS-KITA)

PROJECT PROVINCES

CITIES AND TOWNS

PROVINCE CAPITALS

NATIONAL CAPITAL

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INTERNATIONAL BOUNDARIES

This map was produced bythe Map Design Unit of TheWorld Bank. The boundaries,colors, denominations andany other information shownon this map do not imply, onthe part of The World BankGroup, any judgment on thelegal status of any territory, or any endorsement oracceptance of suchboundaries.

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