Abstract
The purpose of this study is to investigate and analyze the efficiency and effectiveness of local government expenditure on education sector in districts and cities level of East Java, during the periods 2007-2014. Furthermore, this study will evaluate the impacts of local government expenditure, household expenditure for education, and regional product domestic bruto or (PDRB) on the educational outcomes, namely education index.Data Envelopment Analysis (DEA) is selected as the methodology for analyzing the efficiency of local government expenditure on educational outcome. The model assumes constant return to scale (CRS) and variable return to scale (VRS). Measurement of the effectiveness of government spending is done by using panel data regression. Data for supporting the analyses is panel data from 38 districts and cities in East Java for the periods of 2007 – 2014. The results show that government expenditure in educational sector is relatively inefficient. Government Expenditure for Education (PPP) has no significant impact on educational index, while Household expenditure for education (PPRT) and GRDP per Capita positive has significant impact on the Education Index (IP). This imply that government expenditure for educational sector is not effective improving educational index.
Highlights
The regional development processes is strongly associated with local government commitment in terms of determining strategic sectors to be pushed as the leading sector
Measurement of the effectiveness of government spending is done by using panel data regression
Government Expenditure for Education (PPP) has no significant impact on educational index, while Household expenditure for education (PPRT) and GRDP per Capita positive has significant impact on the Education Index (IP). This imply that government expenditure for educational sector is not effective improving educational index
Summary
The regional development processes is strongly associated with local government commitment in terms of determining strategic sectors to be pushed as the leading sector. The economic consequence of choice for regional development priority is resources allocation to support the program. The resource or budget allocation of local government will be directly for supporting the selected and strategic sector. The argument is because larger share of budget means more programs can be implemented to support all the development targets. It is regulated by the Law number 20/2003 which regulated educational system in Indonesia. This Law give mandate that both local and central government have to allocate budget for supporting educational development, with the minimum share of 20 percent
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