Efficiency of the Realization of the 20% Budget for the Development of Educational Infrastructure: Case Study of 33 Regencies/Cities in North Sumatra Province

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FORMOSA NEWS - Medan  - Allocating a minimum of 20 percent of local government budgets to public education does not automatically yield superior school infrastructure or higher educational performance. A comprehensive study published in early 2026 by researchers Rosadi Patra Tanjung and Mangaraja Halongonan Harahap from Universitas Sumatera Utara reveals significant disparities in budget management efficiency across all 33 regencies and cities in North Sumatra Province. The findings demonstrate that administrative competence and strategic resource management matter far more than total financial expenditure or regional wealth in elevating educational standards.

Background: The Education Budget Paradox

Indonesia mandates by constitutional law that local governments devote at least 20 percent of their total annual budgets to the education sector. This legislative effort seeks to expand access, equalize educational opportunities, and modernize school facilities across diverse administrative regions. However, equal financial allocation has historically failed to resolve regional disparities in educational outcomes. Policy experts frequently observe that regions with substantial fiscal resources often struggle to convert public investment into tangible infrastructure improvements or high-quality educational services. The research addresses this policy challenge by evaluating whether public financial management, rather than budget size, limits regional educational progress.

Research Methodology
The authors analyzed public financial records and regional performance indicators from 2019 to 2022 across all 33 administrative regencies and cities within North Sumatra Province. The dataset incorporated secondary figures provided by the Badan Pusat Statistik (BPS) of North Sumatra Province, the Ministry of Finance, and provincial planning documents. To measure relative administrative performance, the researchers utilized Data Envelopment Analysis (DEA) with an input-oriented model. First introduced by economists Abraham Charnes, William W. Cooper, and Edward Rhodes in 1978, DEA evaluates how effectively different decision-making entities transform multiple inputs into measurable outputs. The inputs evaluated in the study were:

• The realized 20 percent education expenditure from regional budgets.
• Gross Regional Domestic Product (GRDP) per capita, representing local economic capacity.

The evaluated output was:
The Regional Education Development Index (Indeks Pembangunan Pendidikan Daerah or IPPD)
Regions received relative efficiency scores on a scale ranging from 0.00 to 1.00, where a score of 1.00 signifies optimal efficiency on the efficiency frontier.

Key Findings: Disparities and Operational Slack
The empirical results confirm that administrative efficiency varies widely across North Sumatra, with a majority of jurisdictions operating well below optimal efficiency:

• Low Efficiency: Approximately 27.27 percent of regions (9 out of 33) fell into the low efficiency category with scores between 0.00 and 0.50. One municipality recorded a score below 0.30.
  
• Moderate Efficiency: The majority of jurisdictions clustered in the moderate efficiency range (scores between 0.51 and 0.90), demonstrating significant room for managerial improvement.
  
• Optimal Benchmarks: Only three jurisdictions achieved full technical efficiency (score of 1.00): Medan City, Pakpak Bharat Regency, and Pematangsiantar City.
  

The study highlighted that higher Gross Regional Domestic Product (GRDP) per capita does not correlate directly with higher efficiency. Several economically wealthy districts recorded moderate efficiency scores, revealing that financial prosperity does not automatically translate into effective public administration. Input reallocation analysis indicated substantial operational slack in inefficient regions. These districts could maintain their current educational index performance while sharply reducing resource wastage, or conversely, achieve higher education development scores without increasing total spending. Benchmarking metrics identified Pematangsiantar City and Pakpak Bharat Regency as the primary peer references for underperforming districts to emulate.

Real-World Impact and Policy Implications
These findings offer clear guidance for municipal planners, regional policymakers, and national education authorities. Rather than focusing on budget expansion, regional leaders must prioritize structural reforms that target internal governance. Key policy implications include:
Transition to Results-Based Budgeting: Local governments must move away from rigid, input-focused spending targets toward outcome-based educational planning.
Inter-Regional Benchmarking: Underperforming municipalities can use quantitative peer comparisons to model their budget allocation, project targeting, and oversight frameworks after top-performing regions like Pakpak Bharat and Pematangsiantar.
Targeted Capital Allocation: Identifying operational slack allows public authorities to reallocate excess administrative expenditure directly into critical infrastructure projects, such as school modernization and digital access facilities, without straining local taxpayers.

Author Profiles
Rosadi Patra Tanjung, S.E., M.Si. is an academic and researcher affiliated with Universitas Sumatera Utara, Indonesia. His field of expertise encompasses public economics, regional development planning, and quantitative policy analysis.
Mangaraja Halongonan Harahap, S.E., M.Si. is a scholar at Universitas Sumatera Utara, Indonesia. His expertise focuses on regional economic governance, public expenditure management, and development evaluation methodologies.

Source
Rosadi Patra Tanjung, Mangaraja Halongonan Harahap. Efficiency of the Realization of the 20% Budget for the Development of Educational Infrastructure: Case Study of 33 Regencies/Cities in North Sumatra Province. International Journal of Scientific Multidisciplinary Research (IJSMR).Vol. 4, No. 1, Hal. 77–90
DOI: https://doi.org/10.55927/ijsmr.v4i1.874
URL: https://mryformosapublisher.org/index.php/ijsmr