Muhammad Adi Rahman

School Efficiency and Funding

A school, whether it is a public or private school, is an education institution which requires significant amounts of investment and operational funds. The schools’ capability in utilizing its financial resources is one of the most essential factors that will determine its success (or failure) in providing education to its students. Low-cost private schools included in Figure 13 apparently showed a more efficient use of their financial resources compared to the public schools within the same districts.

Figure 13

Monthly Operational Cost


Low-cost private schools that were part of this study had on average 33.85 per cent lower monthly operational costs per student than public schools. This may be due to their simple facilities or due to their default on utilities payments but, even though the facilities are not as sophisticated as in public schools, the quality of low-cost private schools is comparable or even better than in public schools as was shown in the previous chapters.


The existence of low-cost private schools creates options for low-income households to access formal education in West and North Jakarta. Our research indicates that this type of private schools provides education for impoverished people who cannot fulfil complex enrolment requirements. Low tuition fees make them affordable for people who need basic school education. Interestingly, they also achieve comparable or even better scores in national exams and use their financial resources more efficiently compared to public schools.


All advantages considered, the existence of low-cost private schools provides accessibility for low-income households to formal education in Indonesia.

Sixty four low-cost private schools were visited by CIPS through field research that was conducted in six different provinces namely Aceh, Lampung, Jakarta, Central Java, North Sulawesi, and East Nusa Tenggara. The research discovered that private individuals who live in remote or impoverished areas often founded these low-cost private schools. It was their private initiative that led to education for the children in deprived areas. Policymakers should consider enlarging the access to education by encouraging private inititiave for the creation of more private schools.

Most of the low-cost school children are from low-income families whose parents are working as farmers, domestic helpers, market traders, cycle rickshaw drivers, etc. with monthly salaries often less than $72. Tuition fees that range from $0.4 to $36 per month are considered affordable by the parents, also because of the proximity of the schools, which saves them additional costs for transport and other incidental charges.

The quality of the low-cost private schools is evidently comparable to public schools. The average mathematics scores achieved by private school students is 23.8% higher than scores achieved by public schools students while reading scores are only slightly higher in public schools.

Operational costs per student are about one third lower in the private schools than in the public schools that were part of this study. Private schools are using their funds much more efficiently. While both private and public schools receive national and local subsidies, it was found that these could actually harm the sustainability of the low-cost private schools when the disbursement process is hampered by bureaucratic problems. An independence from government subsidies makes them less affected by the performance of government agencies.

In conclusion, low-cost private schools serve not only an important function in the Indonesian education system but they also set new benchmarks in terms of education quality and operational efficiency. If the government was to encourage the creation of more of these schools, they can provide the competition and the pressure on public schools that may eventually lead to a better performance of the Indonesian education system as a whole.


[1] Data available at , accessed 19 April 2016 at 10:20

[2] According to the UNESCO Education for All Global Monitoring Report, Youth and Skills: Put-ting Education To Work 2012, twenty percent of young people in developing countries fail to complete primary school, available at; retrieved 17 June 2016. See also:

[3] The Economist, The $1-a-week school. Private education in poor countries takes off, August 1st-7th 2015. Online version available at:, retrieved on 17 June, 2016.

[4] McLoughlin, C (2013) Low-Cost Private Schools: Evidence, Approaches and Emerging Issues, Uni-versity of Birmingham, September 2013, available at retrieved 17 June 2016.

[5] Tooley, J.,(2013) The Beautiful Tree, A Personal Journey Into How the World’s Poorest People AreEducating Themselves, Washington, Cato Institute.

[6] The Economist. Low-cost private schools: Learning Unleashed. Online version available at retrieved 17 June 2016.

[7] Education Sector Analytical and Capacity Development Partnership (ACDP), Study on Teacher Absenteeism in Indonesia 2014, December 2014, Online version available at retrieved 17 June 2016. Teacher absenteeism from school was 8.5% in public schools and 12.8% in private schools. However, absenteeism from class was 14.9% in public schools and 9.7% in private schools. This means that more teachers stay away from private schools but when they show up they are more likely to teach.

[8] Ministry of Education and Culture, Number of Schools within DKI Jakarta Province, Ministry ofEducation and Culture Data Reference, available at retrieved 19 Nov 2015


[9] North Jakarta Central Bureau of Statistics, Number of The Poor by Regency/Municipality, 2013,available at <>. retrieved 22 January 2016. 20

[10] Madrasah Ibtidaiyah (MI) are private Islamic primary schools


[11] National Education System Law, No 20, 2003, online version available at retrieved 29 November 2016 at 17.00.

[12] Schools are registered in the Ministry of Education and Culture Database. Schools that are ac-credited have also been assessed by National Accreditation Body of Indonesia in terms of their eligibility in conducting education. See National Education System Law No. 20, 2003. Online version available at, retrieved 29 November 2016 at 17.00.


[13] Kemendikbud. (2015). Perkembangan Pendidikan Tahun 2008/2009 - 2013/2014. Jakarta: Pusat Data dan Statistik Pendidikan dan Kebudayaan. Online version available at retrieved 14 December 2016 at 14.38.

[14] Kemendikbud. (2015). Perkembangan Pendidikan Tahun 2008/2009 - 2013/2014. Jakarta: Pusat Data dan Statistik Pendidikan dan Kebudayaan. retrieved 14 December 2016 at 14.42. The number has been the tabulation of the total number of school presented in Figure 3.

[15] This school does not charge an official tuition fee with a fixed amount. Rather, parents pay a voluntary contribution when they come to collect their children’s academic report.


[16] Kompas Daily, (14 July 2016). DPRD Pasuruan Keluhkan Sekolah Lakukan Pungutan hingga Rp1,7 Juta (House of Representative of Pasuruan District Complains on School’s Attempt to Collects Levy Of Up To 1.7 Million Rupiahs), Jakarta.

[17] The World Bank, (2014) World Bank and Education in Indonesia, September 1, 2014, available online at


[18] The Decree of the Minister of Education and Culture on Technical Guidance for the Use and Financial Accountability of School Operational Assistance for the Fiscal Year of 2015, available online at retrieved 15 December 2016 at 22.21.

[19] Interview with Schools Principals in Jakarta, 11 November 2015, Interviewer: MA. Rahman et al.


[20] Interview with Parents in Tambora, Jakarta, 11 November 2015, Interviewer: MA. Rahman et al.


[21] Interview with Parents in Tambora, Jakarta, 11 November 2015, Interviewer: MA. Rahman et al.

[22] The figure for Tambora and Kalideres, two districts in West Jakarta has been tabulated from tables  published in print by the BPS Kota Jakarta Barat (2015), while the figure for Penjaringan and Cilincing, two  districts in North Jakarta has been tabulated from tables published in print by BPS Kota Administrasi Jakarta Utara (2015)

[23] The online version of the decree is available at retrieved 14 December 2016 at 17.23.

[24] A household registration or family card (Kartu Keluarga) is a family identity card.

[25] Australia Indonesia Partnership for Justice (AIJP), (2014) AIPJ Baseline Study on Legal Identity: Indonesia’s Missing Millions, Jakarta: DFAT, PEKKA, Puskappa UI. Online version available at retrieved 14 December 2016 at 17.29.


[26] Jakarta Education Office, Public Junior Secondary School Passing Grade in Jakarta, 2013, available at retrieved 29 March 2016.

[27] Al-Samarrai, S & P Cerdan-Infantes, ‘Where Did All the Money Go? Financing Basic Education in Indonesia’, in D Suryadarma & GW Jones (eds.), Education in Indonesia, Institute of Southeast Asian Studies, Singapore, 2013, p. 119

[28] World Bank, Education Public Expenditure Review, Jakarta, 2012, cited in: Al-Samarrai, Cerdan-Infantes 2013, p. 121


[29] Al-Samarrai, Cerdan-Infantes 2013, p. 121

[30] De Ree, J., K. Muralidharan, M. Pradhan and H. Rogers, Double for what? The effects of unconditional  teacher salary increases on performance, World Bank, Jakarta, 2012, cited in: Al-Samarrai, Cerdan-Infantes 2013, p. 123

[31] Interview with Schools Principals in Jakarta, (19 – 20 October) and (2 – 3 November) 2016/Interviewer: MA. Rahman et al.



Education | December 2016

low cost private schools.
a case study in jakarta

This study provides an analysis of the presence of low-cost private schools as an alternative to formal education in Indonesia for people with middle-to-low incomes.


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