ASIAN DEVELOPMENT BANK TAR: INO 34120

TECHNICAL ASSISTANCE

TO THE

REPUBLIC OF INDONESIA

FOR

SUPPORT FOR DECENTRALIZED EDUCATION MANAGEMENT

August 2001

CURRENCY EQUIVALENTS (as of 29 June 2001)

Currency Unit – Rupiah (Rp)

Rp1.00 = $0.000087 $1.00 = Rp11,445

ABBREVIATIONS ADB – Asian Development Bank BAPPENAS – Badan Perencanaan Pembangunan Nasional (National

Development Planning Board) DPRD – district parliament EMIS – education management information system MOF – Ministry of Finance MOHARA – Ministry of Home Affairs and Regional Autonomy MONE – Ministry of National Education MORA – Ministry of Religious Affairs PROPENAS – Five-Year National Development Plan TA – technical assistance TMMU – Transition Monitoring and Management Unit TOR – terms of reference

GLOSSARY

kabupaten – predominantly rural district kota – predominantly urban district madrasah – Islamic schools

NOTE

(i) In this report, "$" refers to US dollars.

I. INTRODUCTION

1. The Government of Indonesia requested the Asian Development Bank (ADB) to provide technical assistance (TA) to support decentralization of education management. The Fact-Finding Mission (24 January to 7 February 2001) and a follow-up mission in March 2001 reached understanding with the Government on the components, objectives, scope, budget, and implementation arrangements of the TA.1

II. BACKGROUND AND RATIONALE

2. The education system encompasses 235 preschools and 172,066 primary schools (public and private), 30,716 junior secondary, 15,647 senior secondary (including 4,169 vocational schools), and 338 special schools for the differently abled. The system caters to diverse clientele spread across 14,000 islands and 4,000 kilometers, and is the largest public service system in Indonesia, employing 1.93 million staff (of whom 1.6 million are teachers). 3. Indonesia is decentralizing public administration to institutionalize greater regional autonomy. Under the Regional Governance Law (22/1999) and the Fiscal Balance Law (25/1999), made effective on 1 January 2001, over 360 districts2 became responsible for planning, management, financing, and delivery of 11 public services, including education. Districts are now responsible for preschool and formal and nonformal programs for basic education (primary or grades 1-6 and junior secondary or grades 7-9) and senior secondary education (grades 10 to 12) including formal and nonformal vocational and technical education. A series of implementation regulations and guidelines delineate the roles of national, provincial, and district governments. The Five-Year National Development Plan (PROPENAS) 2001-2005 sets the direction of district-level education management, and mandates establishment of school boards and empowerment of school committees. 4. Before decentralization, education management was complex and compartmentalized into several ministries, and thus inefficient and ineffective. Primary education involved three ministries; junior and senior secondary education (formal and nonformal) involved four. The Ministry of National Education (MONE) planned, coordinated, and regulated education at all levels (formal and nonformal), financed and directly administered public junior and senior secondary (including vocational and technical education) and higher education institutions. MONE set the core curriculum for all schools. The Ministry of Religious Affairs (MORA) administered and financed public primary, and junior and senior secondary Islamic schools (madrasah) and Islamic universities. MORA also supervised and financially assisted private madrasah. The Ministry of Manpower designed and implemented nonformal vocational education programs. The Ministry of Home Affairs and Regional Autonomy (MOHARA) administered and delivered public primary education. MOHARA covered primary school teacher management, establishment and maintenance of primary schools, and provision of subsidies to secular private primary schools. The multiministry management structure was replicated at provincial and district levels where each line ministry was represented by a local office. 5. Education sector budgeting and financing involved each of these ministries, as well as the Ministry of Finance (MOF) and the National Development Planning Board (BAPPENAS). Each type and level of schooling and program had a mix of financing arrangements, funds sources and funding channels. Budget planning lacked coordination and an information system

1 The TA was first listed in ADB Business Opportunities on 24 January 2001. 2 Districts include predominantly rural districts (kabupaten) and predominantly urban districts (kota) that have equal

standing.

2

that could track consolidated budget flows to the education system as a whole, making it difficult to monitor education service delivery and costs. 6. Decentralization, if implemented effectively, offers a major opportunity to streamline and rationalize education management, and thus to make education service delivery more efficient, effective, and responsive . Education management and financing are now consolidated under district governments, whose responsibilities include local curriculum development, school location planning, budgeting, financing, school staff and teacher appointment and transfer, and school maintenance. Provinces determine regulations for minority and economically disadvantaged students, help provide instructional materials for basic and senior secondary education, help implement higher education, recommend to MONE opening and closure of higher education institutions, and run teacher training and special schools for the handicapped. The roles and functions of the national government (mainly MONE and MORA) in education are substantially reduced to determining policies, the national curriculum, national examination and assessment system, school calendar and learning hours for basic and senior secondary education, and guidelines on minimum service standards.3 MORA’s future role is one of several matters requiring clarification. 7. Benefits from decentralization depend on an effective education management framework, structure, and system, as well as a coherent plan for change. Otherwise, decentralization would only further compartmentalize, disintegrate, and widen gaps in equity and quality of service delivery, particularly if financial and human resources are inadequate for increased district-level responsibilities. PROPENAS underscores the need to establish a well-integrated national education framework, and an efficient, responsive, and decentralized management structure. 8. An extremely tight time frame has resulted in an ad hoc, fragmented decentralization process. The education sector has yet to establish medium-term strategic directions and a management framework. The education budget planning and allocation system needs to ensure adequate, equitable, and timely resource flows to local governments and schools. The system needs to help institutionalize school-based management, achieve minimum service standards, and subsidize education in disadvantaged areas. The education management information system remains highly centralized, inhibiting objective and rational sector planning at the district-level. A simple but effective education information system must be set up immediately at the district level. 9. Education sector management structures and organizations at all levels need to be up to their new functions and responsibilities and supported by vertical (between the national and local governments) and horizontal (within the national and local governments) information and communication mechanisms. The sector needs (i) human resources strategies to ensure a rational and balanced staffing and skill mix at each level; (ii) capacity-building strategies and programs to develop staff capacity to effectively operate the new organizations, systems, and procedures; and (iii) a system, mechanisms, and performance indicators to monitor the process and effects of decentralization on education service delivery. 10. Several funding agencies support decentralization, covering a number of critical issues at different education levels. ADB, assisted by the policy matrix of the Social Protection Sector

3 The minimum service standards, among others, cover (i) expected achievement at each age; (ii) learning

materials; (iii) acceptance, transfer, and certification of students; (iv) learning time for basic education; and (v) the education calendar. The national Government is also responsible for defining internal procedures for (i) appointing, removing, and dismissing teachers; (ii) determining pensions, salaries and benefits; (iii) enforcing rights and obligations; and (iv) determining the legal status of civil servants and regional civil servants.

3

Development Program, has supported introduction of direct block grants to schools. Two accompanying technical assistance projects have (i) monitored and examined in-depth the constraints on and options for institutionalizing block grants within the education financing system, and (ii) developed training programs for districts and schools on financial planning and management. The World Bank helps MONE revise education laws by (i) conducting policy studies, (ii) refining minimum service standards, and (iii) conceptualizing the roles of the proposed national education commission and local school boards. World Bank support focuses on (i) quality standards, (ii) curriculum improvement, and (iii) teacher issues. The Australian Agency for International Development (AusAID) helps MONE (i) integrate quality and outcome-focused inspections and (ii) redefine inspection functions at each level. The Canadian International Development Agency (CIDA) helps BAPPENAS (i) provide a broad conceptual framework for decentralization; (ii) disseminate best practices; and (iii) develop policy recommendations on organization, human resources, and education finance strategies. The German Agency for Technical Cooperation (GTZ) supports (i) administrative decentralization in BAPPENAS and MOHARA, and (ii) a number of local governments in broader organizational development. 11. The proposed TA builds on these initiatives and addresses critical requirements: (i) managing, coordinating and monitoring the decentralization process, which integrates vertical and horizontal coordination and communications; and (ii) preparing the ground for rational information-based district-level education sector planning. Without these initiatives, fragmentation at the national and local levels would be greater. The TA focuses on integrating and implementing the change process and management (organization, finance, and human resources), building on and complementing ongoing support. 12. Decentralization will generate opportunities and challenges that cannot be fully anticipated at the outset. Building on key findings of ADB’s recent evaluation study on policy reforms,4 the TA will provide programmatic, flexible, and process-oriented support.

III. TECHNICAL ASSISTANCE

A. Objectives

13. The TA aims to support the initial steps of decentralizing education management and to prepare the ground for more efficient, equitable, and effective delivery of education services. The TA’s immediate objectives are to (i) support the creation and capacity building of the transition management and monitoring unit (TMMU) at MONE; (ii) develop a coherent management framework and manage change through a shared strategic framework for the education sector; (iii) support monitoring of the decentralization process and its effects; (iv) establish a foundation for district-level information-based education sector planning and management; and (v) analyze and prioritize capacity-building requirements (integrating organization, system, process, and staff development) for district-level education management. Appendix 1 provides the TA’s logical framework. B. Scope

14. The TA activities will support national and local government efforts. At the national level, activities will be based at MONE but will also actively involve BAPPENAS, MORA, MOF, and

4 Special Evaluation Study on Sustainability of Policy Reforms through Selected Advisory Technical Assistance,

January 2001.

4

MOHARA. At the local government level, the TA will work intensively with about 15 case districts in three provinces.5 15. At the national level, the TA will (i) support a strategic planning process to establish medium-term performance goals, directions, and a management framework for decentralizing education management, (ii) establish and run a steering committee and the TMMU,6 and build their capacity to monitor the process and effects of education decentralization; (iii) establish communication between concerned ministries, within MONE, and between the national and local governments on education decentralization, and respond to queries from local governments or refer such queries to the proper agency; (iv) help the steering committee and TMMU consolidate policy recommendations (including those from ongoing funder-supported projects) on decentralization; and (v) develop and implement a coherent management framework for decentralized education management and time-bound implementation plans to guide key organizational and system changes required at the national level and in case districts. 16. The TA will (i) undertake a thorough baseline survey of basic education services in case districts; (ii) analyze the results of the baseline surveys; (iii) develop a medium-term basic education development plan; (iv) examine and identify realistic options for improving the education management information system at the district level; and (v) review and define priority capacity-building requirements (organization, system, process, and staff development) and develop capacity-building plans to be implemented through separate TA or project support. 17. The TA will finance approximately 20 person-months of international and about 55 person-months of domestic consulting services, as well as workshops and seminars. C. Cost Estimates and Financing Plan

18. The total cost of the TA is estimated to be $1.24 million equivalent, of which $631,200 is foreign exchange cost and $608,800 local currency cost. The Government has requested ADB to finance $990,000 equivalent to cover the entire foreign exchange cost of $631,200 and $358,800 equivalent of the local currency cost. The TA will be financed by ADB on a grant basis from the ADB funded TA program. The Government will finance the balance of the local currency cost equivalent to $250,000 by providing salaries and wages, domestic travel and per diem of counterpart staff, office space, facilities, supplies, and documentation. The table below summarizes the TA cost, and Appendix 2 shows the detailed breakdown.

Cost Estimates and Financing Plan ($ ‘000)

Foreign

Exchange Local

Currency Total

Asian Development Bank 631.2 358.8 990.0 Government 0 250.0 250.0

Total 631.2 608.8 1,240.0 5 The case districts are in Bali, Nusa Tenggara Barat and DI Yogjakarta. Bali and Nusa Tenggara Barat were

selected to allow direct coordination with ADB assistance to these areas through proposed INO: Decentralized Basic Education Project and DI Yogjakarta was chosen because it has been able to steadily improve education service despite limited financial capacity. Case districts and provinces may be changed if doing so would enhance the TA overall impact.

6 The TMMU will be located at MONE but with the steering committee, will coordinate with all parties concerned in defining and implementing decentralized education management structures.

5

D. Implementation Arrangements

19. The TA will start in mid-2001 and be completed by mid-2004. A team of international and domestic consultants will be recruited through a firm, in accordance with ADB’s Guidelines on the Use of Consultants and other arrangements satisfactory to ADB for the engagement of domestic consultants. Appendix 3 shows the outline terms of reference (TOR) for consultants. Decentralization demands that the TOR be flexible to permit timely mobilization of technical support when needed. Minor office equipment, computers and printers will be procured for TMMU by the consultants in accordance with ADB’s Guidelines for Procurement. 20. MONE will be the TA’s Executing Agency. The implementing agencies will be the secretary general’s office of MONE for national and provincial activities, and district governments for district-level activities. A steering committee will be established and chaired by the MONE secretary general, and will comprise representatives from MONE, BAPPENAS, MOF, MORA, MOHARA, and the State Ministry for Administrative Reforms (MENPAN). The steering committee will (i) play an important role in overall implementation; (ii) be directly involved in strategic planning at the outset; and (iii) continue to be directly involved in intra- and inter-ministerial consultation, policy coordination and clarification, and decision making. The committee will be organized one month before the TA’s start and will continue to function until three months after the TA’s completion. Steering committees chaired by the district heads will comprise representatives of the district parliaments, the provincial planning agency, district education offices, and the parent-teacher association. Day-to-day activities will be based in the education office in the unit responsible for overall planning and management of education. 21. MONE will establish the TMMU, which will consist of 6-8 staff who will act as direct counterparts of the TA consultants. MONE will also appoint a project manager to lead the TMMU and supervise TA implementation. TA target areas will include (i) planning, monitoring, and evaluation; (ii) personnel; (iii) finance and budget; (iv) education programs (particularly primary and secondary); and (v) information management. The project manager will be responsible for collating and presenting to the steering committee brief monthly progress reports from the transition management team and districts. The project manager will also be responsible for (i) coordinating with district project managers; (ii) managing networking with other project teams and organizations; (iii) working closely with local and international consultants on planning and implementation; and (iv) ensuring that the team is available for project activities as scheduled.

IV. THE PRESIDENT'S DECISION

22. The President, acting under the authority delegated by the Board, has approved the provision of technical assistance, on a grant basis, to the Government of the Republic of Indonesia in an amount not exceeding the equivalent of $990,000 for the purpose of Support for Decentralized Education Management, and hereby reports such action to the Board.

TECHNICAL

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Appendix 1, page 1

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Appendix 1, page 3

. Performance Monitoring Mechanisms AssumptionsDesign Summary Indicators/Targets and Risks

Key Activities andInputs

Design and facilitate Workshops and Synthesis of workshop Stable leadership andstrategic planning process background materials outputs commitment of the ministerial

steering committee to medium-Assist in and provide on- Consultants for Workshop outputs term changethe-job training for theTMMU in

i8 reviewing and change management TMMU regular reports No major resistance to interdiagnosing and decentralization departmental coordinationreorganization TA technical and quarterly within MaNE(structures, systems, 8 education finance reportsand resources) in

MaNE, and case 8 informationprovinces and managementdistricts, focusing onareas requiring On-the-job training on Policy and procedural Inter ministerial coordination togreater clarification transition management instructions for education improve the overalland integration of and monitoring sector management system androles and functions; effectiveness of decentralized

Workshops and seminars education managementcoordinating andintegrating outputs Computer and No resistance from the districtsand communication equipment to regular TMMU visits to andrecommendations of communications with, theiron going efforts in schools

educationdecentralization;

establishing regularand supportivecommunicationbetween nationalGovernment and thecase districts, and

! within case districts,

i 8 reviewing policy and, procedural1, frameworks to, ensure clear and

accurateinterpretation oflegislation to facilitatedecentralization ofeducationmanagement;

developingmechanisms tocoordinate withconcerned ministries

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10

Appendix 2

COST ESTIMATES AND FINANCING PLAN ($)

Foreign Local Total Item Exchange Currency Cost A. Asian Development Bank Financing

1. Consultants a. Remuneration and Per Diem i. International Consultants 430,500 - 430,500 ii. Domestic Consultants - 224,000 224,000 b. International and Local Travel 75,000 10,000 85,000 c. Reports and Communications 8,000 15,000 23,000 2. Equipment 10,000 - 10,000 3. Workshops - 50,000 50,000 4. Surveys and Data Processing - 10,000 10,000 5. Miscellaneous Administration and Support Costs

- 17,500 17,500

6. Representative for Contract Negotiations 6,000 - 6,000 7. Contingencies 97,200 32,300 129,500 Subtotal (A) 631,200 358,800 990,000 B. Government Financing 1. Office Accommodation and Transport - 90,000 90,000 2. Remuneration and Per Diem of Counterpart Staff

- 110,000 110,000

3. Others (Workshops, Studies, Reports) - 50,000 50,000 Subtotal (B) - 250,000 250,000 Total 631,200 608,800 1,240,000

Source: Staff estimates.

(Reference in text, Page 4, Para 18)

Appendix 3, page 1

11

OUTLINE TERMS OF REFERENCE FOR CONSULTANTS An international consultant will serve as a team leader, a domestic consultant as deputy team leader.

A. Education Management and Decentralization Specialist (international, 10 person-months)

1. As the team leader, the specialist will coordinate the overall activities of the technical assistance. The specialist will be based at the Transition Management and Monitoring Unit (TMMU) at the Ministry of National Education, but will travel extensively to case districts. The specialist will (i) organize and work with the Steering Committee and TMMU; (ii) design and implement workshops and on-the-job coaching on change management for the Steering Committee and TMMU members; (iii) conduct strategic planning for decentralized education management; (iv) develop and refine a coherent management framework for decentralized management; (v) consolidate TMMU’s (a) terms of reference and work plans, (b) performance indicators, and (c) targets; (vi) systematize the vertical (between the national, provincial, and district levels) and horizontal (within MONE) communication and coordination mechanisms; (vii) help the Steering Committee and TMMU (a) review the process of decentralizing education management, (b) identify and analyze of emerging issues and constraints, and (c) develop and implement strategies to reduce constraints, all of which tasks require (a) focusing on clarity of roles; (b) understanding and integrating central, provincial and district policy and procedural responsibilities; and (c) responding quickly to queries and suggestions from local governments on education management; (viii) identify and disseminate best practices; (ix) review and recommend capacity-building requirements to MONE and case districts; (x) establish practical information systems and resource centers on education management and decentralization (including consolidation and dissemination of procedural and administrative updates, activities and outputs of funder-supported projects on education decentralization, and training programs and materials); and (xi) undertake other tasks as required.

B. Education Finance Specialist (international, 6 person months)

2. The specialist will work with MONE, Ministry of Finance, Ministry of Home Affairs and Regional Autonomy, National Development Planning Board (BAPPENAS), and case districts to (i) examine decentralized budget planning and allocation system and processes; (ii) review their implications for the education sector in general, MONE and the Ministry of Religious Affairs’ budgets, case districts’ education budgets, and overall implications on school operations; (iii) identify and analyze the effects of fiscal decentralization on basic education services and school-based management, particularly in impoverished case districts; (iv) provide practical support to develop (a) immediate and medium-term plans and strategies to reverse the imbalance of education budget allocation between the national and local governments, and (b) clear policies and mechanisms for national subsidies to less financially capable local governments; (v) develop concrete options for the national and local governments (policies, procedures, funds flow mechanisms, and budget allocation criteria and formulas) to reduce constraints on basic education financing, including options to provide adequate and timely transfer and flow of resources to schools; (vi) facilitate discussions within the national and local governments to implement these options; (vii) assess the capacity of districts to undertake financial planning for and manage the

(Reference in text, Page 4, Para 17)

Appendix 3, page 2

12

education sector; (viii) recommend and design practical capacity-building strategies and programs to improve education finance planning and management in the case districts; and (ix) undertake other activities as required.

C. Education Management Information System Specialist (international, 4 months)

3. The specialist will (i) review in-depth the existing education management information systems (EMIS) at MONE and the Ministry of Religious Affairs, particularly from the point of view of their utility under a decentralized education management structure; (ii) review the EMIS or any routine data collection and management at the case districts; (iii) examine the technical feasibility to adjust (i) and (ii) to meet the information management requirements of the decentralized education management structure; (iv) recommend options for adjusting or further developing decentralized EMIS that are technically feasible and cost-effective; (v) in collaboration with the school mapping and baseline survey specialists, help the case districts process and analyze the results of basic education baseline survey and use the analysis for medium-term basic education development plans; (vi) consider establishing a simple management information system for the TMMU that complements but does not duplicate the function of the MONE’s Statistical Office and/or identify optimal arrangements for MONE to collect and analyze information to monitor and assess impacts of decentralization on education services; (vii) assess care districts’ capacity and develop capacity-building strategies for case districts to collect, analyze, and manage information, and implement information-based education planning and management; and (viii) undertake other activities as required.

D. Local Government and Organization Development Specialist (domestic, 15 person-months)

4. The specialist, to be based in a case district in Nuso Tenggara Barat, will primarily work with the case districts. As the deputy team leader, the specialist will coordinate district-level activities of the TA. The specialist will (i) regularly visit case districts and conduct interviews with the key stakeholders (office of district heads, District Parliament, district economic planning, Finance, district and school committees, and other major entities, including schools) to examine local governments’ organizational development in the case districts; (ii) assess the progress of the district-level transition process and emerging relationships between key local government entities, particularly as they affect basic education sector, emerging structures, basic education planning and management, local governments’ relationship with sub-district and schools, and impacts on schools; (iii) assess key stakeholders’ degree of awareness and interest in basic education themes, issues, and priorities; (iv) recommend socialization strategies and activities to promote local government support for basic education; (v) integrate these findings into strategies for social marketing and public relations in all case districts to promote their support for basic education; (vi) establish contacts with and examine on going funder and other support to local government capacity building in the case districts; (vii) analyze medium-term district-level capacity-building requirements, to develop organizations, systems, and mechanisms to support school-based management, which are not covered or planned by other funders; and (viii) undertake other tasks as required.

E. Education Planning Specialist (domestic, 15 person months) 5. The specialist, to be based in a case district in Nuso Tenggara Barat, will primarily work with the case districts. The specialist will help the case districts (i) design a baseline survey of basic education service provision and analyze the results; (ii) develop detailed medium-term basic education development plans, including annual cost estimates; (iii) in close coordination with

Appendix 3, page 3

13

the education finance specialist, analyze in-depth the case districts’ budget preparation process, financial and budget planning capacity, and overall financial capacity to provide basic education services provision including developmental activities to remedy shortages and deficiencies in service provision; (iv) explore case districts options to improve overall education and education budget planning, and define case districts’ capacity-building requirements; (v) provide practical support to the case districts in addressing constraints on basic education planning and management; and (v) undertake other tasks as appropriate.

F. School Mapping and Education Baseline Survey Specialist (domestic, 10 months)

6. The specialist will in close coordination with the case districts, (i) develop methodologies and implementation plans for school and teacher mapping to be conducted in seven case districts; (ii) help the case district education planning offices in school mapping, and data collation and analysis; (iii) ensure that data on the maps match data on the ground; (iv) ensure accuracy of information, including school names; (v) assess land disputes at school sites; (vi) use the mapping data to ensure that school mergers and teacher redeployment have been proposed as required; (vii) help the case districts draw up plans and prepare for school mergers and redeployment of teachers; (viii) review and identify the process of issuing letters of authority and guidelines in each case district, and all steps required to enable the mergers and redeployment to take place, and see if procedures change dramatically after decentralization and vary across case districts; (ix) submit brief monthly reports on activities undertaken, and quarterly reports on (a) tasks accomplished and progress to date, (b) constraints, (c) recommendations, and (d) next steps; and (e) undertake other tasks as required.

G. Information Management Specialist (domestic, 15 months) 7. The specialist will work closely with the TMMU and case districts, and (i) help identify essential information requirements for TMMU and education planning and management in the case districts, (ii) develop a simple and practical information management system for that is compatible with but not covered by the EMIS, (iii) help the TMMU and case districts use information technology and provide practical on-the-job training as appropriate, (iv) assist in computerized processing and analysis of the school mapping and baseline survey results, and (v) undertake other tasks as required.

H. Reporting Requirements

8. In addition to the periodical technical reports, the consultants will prepare quarterly reports and a consolidated final technical report synthesizing findings from the TA activities. The report will (i) analyze the initial experience in decentralized education management, (ii) analyze positive developments and critical shortfalls in education management capacity (organizational, system, process, financial and human resources) within the initial set-up of decentralized education management structures, (iii) recommend medium-term approaches and strategies for priority capacity building required by the decentralized education management structures (at the national level and in case districts), and (iv) provide detailed and costed plans for capacity building to be implemented through subsequent TA or project assistance. Requirements are expected to vary considerably across case districts, and so recommendations should also include (i) flexible strategies to address this diversity, (ii) a detailed review of existing training providers and their capacity, and (iii) options for potential delivery mechanisms of training programs.