Research conducted by Agnes Chiayen Monica Lengkong, Harijanto Sabijono, and Steven J. Tangkuman from Sam Ratulangi University North Sulawesi provides a useful case study of how performance-based budgeting works in practice at the regional level.
Why Performance-Based Budgeting Matters
Performance-based budgeting links public spending to results rather than simply tracking how much money is used. Instead of focusing only on whether funds are spent, this approach evaluates whether spending produces tangible outputs and meaningful outcomes for citizens. In the health sector, this includes improvements in service quality, access to care, disease prevention, and overall public well-being.
Indonesia has formally adopted performance-based budgeting as part of its public financial management reforms. However, implementation at the local level often faces obstacles, such as limited administrative capacity, weak planning processes, and misalignment between programs and performance indicators. The health sector is particularly important because it consumes a significant share of regional budgets and directly affects community welfare.
How the Study Was Conducted
The research uses a qualitative descriptive approach to examine budget implementation at the North Sulawesi Provincial Health Office. Data were gathered from multiple sources, including:
- In-depth interviews with planning and finance staff.
- Direct observation of budgeting and reporting practices.
- Official documents such as budget realization reports, strategic plans, and government performance reports.
To assess budget quality, the authors applied the Value for Money framework. This framework evaluates public spending from three perspectives:
- Economy: whether spending is carried out at the lowest reasonable cost.
- Efficiency: how well inputs are converted into outputs.
- Effectiveness: whether outputs achieve the intended outcomes.
This
approach allows a comprehensive view of not just how much money was spent, but
how well it was used.
High
Budget Absorption, Large Deficit
The study
shows that in the 2024 fiscal year, the North Sulawesi Provincial Health
Office managed a total expenditure budget of approximately IDR 237.1 billion.
Actual spending reached IDR 221.67 billion, or 93.49 percent of
the allocated budget. This level of absorption is generally considered high in
public finance management.
However,
revenue generated by the health office was minimal, totaling only about IDR
87.3 million. As a result, the agency recorded a budget deficit of more
than IDR 221.5 billion, reflecting its heavy reliance on provincial
government funding. This situation is typical for public health institutions,
which prioritize service delivery rather than income generation.
The composition of spending also drew attention. Most of the budget was allocated to operational expenditure, especially personnel costs, while capital expenditure which supports long-term investment in facilities and infrastructure represented only a small portion of total spending.
Implications for Public Health Policy
The study
carries important lessons for policymakers and public administrators. High
budget absorption should not be treated as the sole indicator of success.
Without careful evaluation of efficiency and effectiveness, large public
expenditures risk delivering limited impact.
For the
health sector, improving budget efficiency could lead to better service
delivery, more strategic investment in infrastructure, and improved health
outcomes for communities. For regional governments, the findings highlight the
need to strengthen planning quality, align performance indicators with real
outcomes, and enhance staff capacity in budgeting and evaluation.
The
authors recommend tighter integration between planning and budgeting, more
realistic performance indicators, and regular evaluations using Value for Money
principles. These steps could help ensure that public health budgets deliver
maximum benefit to society.
Author Profiles
Agnes Chiayen Monica Lengkong, S.E. Researcher in public sector accounting, University Sam Ratulangi.
Dr. Harijanto Sabijono, S.E., M.Si. Senior lecturer and researcher in government accounting and public finance, Sam Ratulangi University.
Steven J. Tangkuman, S.E., M.Si. Academic specializing in public financial management and budgeting policy, Sam Ratulangi University.
Source
DOI: https://doi.org/10.55927/fjas.v5i1.540
URL: https://srhformosapublisher.org/index.php/fjas
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