Management Systems and Staff Competence Key to Boosting Municipal Budget Realization in Medan
Strengthening internal management control systems and upgrading civil servant qualifications directly enhance budget absorption within regional government agencies. This key insight was revealed in empirical research conducted by Nur Wahidah Agustin Siregar, Deamarselina Hutagalung, and Galih Supraja from Panca Budi Development University in Medan, Indonesia. Published in the International Journal of Contemporary Sciences (IJCS) in June 2026, the study demonstrates that combining performance accountability frameworks with certified staff technical skills provides a proven solution to the persistent issue of delayed public spending in municipal governance.
Background and Local Governance Challenges
Timely budget absorption reflects a local government's operational capacity to transform fiscal plans into tangible public services, infrastructure, and socio-economic support. However, local governments across Indonesia consistently encounter significant delays in executing their annual regional budgets (APBD). Public expenditure often remains sluggish throughout the first three quarters before spiking drastically in the final quarter of the fiscal year.
Medan City, one of Indonesia's largest metropolitan centers outside Java, manages an annual APBD exceeding Rp6 trillion. Between 2020 and 2023, the average budget realization across 37 regional government agencies (OPDs) reached only 87.26 percent, falling below the national benchmark target of 90 percent. Individual agency absorption rates varied widely, ranging from a low of 68.41 percent to a high of 98.73 percent. This wide performance disparity highlights critical differences in internal governance: the effectiveness of agency control systems and the technical proficiency of civil servants responsible for executing public programs.
Research Methodology
The research team from Panca Budi Development University—Nur Wahidah Agustin Siregar, Deamarselina Hutagalung, and Galih Supraja—designed a quantitative causal study utilizing balanced panel data. The investigation tracked all 37 regional government agencies within the Medan City Government across four consecutive fiscal years (2020–2023), generating 148 distinct observations.
Rather than relying on perception-based survey questionnaires, the researchers analyzed objective secondary data from official government records. Budget absorption rates were calculated using Budget Implementation Reports from the Regional Financial and Asset Management Agency (BPKAD) of Medan City. Management control system quality was measured using official Government Agency Performance Accountability System (SAKIP) evaluation scores issued by the Ministry of State Apparatus Empowerment and Bureaucratic Reform (KemenPAN-RB) and the Medan City Inspectorate. Civil servant competence was evaluated through certified personnel records from the Civil Service and Human Resource Development Agency (BKPSDM) of Medan City, specifically tracking staff holding certified credentials in procurement and financial management. The data was analyzed using multiple linear regression techniques.
Key Research Findings
The empirical analysis established several critical findings regarding municipal budget execution:
- Rising Absorption Trends: Average agency budget absorption in Medan improved steadily from 83.14 percent in 2020 to 91.10 percent in 2023, tracking a parallel rise in average SAKIP accountability scores from 63.2 to 72.4 points.
- Positive Impact of Control Systems: Management Control Systems (SAKIP scores) showed a positive and statistically significant impact on budget absorption. Every single-point increase in an agency's SAKIP score corresponds to a 0.412 percentage point increase in budget realization.
- Positive Impact of Staff Competence: Civil servant technical competence exhibited a positive and statistically significant effect. Every one percent increase in the proportion of certified personnel yields a 0.338 percentage point increase in budget absorption.
- Combined Explanatory Power: Together, management control systems and staff competence explain 61.4 percent of the total variance in budget absorption across Medan's municipal agencies.
- Systemic Dominance: Management control systems contributed 45.3 percent to the model's explanatory power, while staff competence contributed 37.2 percent, proving that systemic accountability frameworks exert a slightly broader influence than individual skill sets.
- Budget Size Irrelevance: The total monetary allocation of an agency had no statistically significant effect on absorption rates, proving that structural governance and staff capacity matter far more than the total size of the budget managed.
Real-World Impact and Policy Implications
The findings offer actionable strategies for municipal leaders, public policy planners, and civil service administration. Improving an agency's performance accountability score by 15 points—moving from a "Fair" rating to a "Good" rating—is projected to increase budget absorption by 6.18 percentage points. In a major city like Medan with a Rp6 trillion budget, this efficiency gain translates to over Rp370 billion in public funds executed more effectively for civic infrastructure and welfare.
City administrators are encouraged to prioritize mandatory technical certification programs for civil servants involved in public procurement and financial management. Furthermore, interventions should focus heavily on technical departments handling major infrastructure projects and sub-district offices, which historically display lower compliance and lower certification rates compared to functional oversight agencies.
Highlighting the complementary nature of institutional controls and human capital, the researchers emphasized that system upgrades and staff training must proceed hand in hand. "A robust control system without competent personnel cannot function at full capacity, while highly skilled officials are equally constrained by weak organizational frameworks. Developing an effective municipal administration requires simultaneous investment in performance accountability systems and certified personnel training," stated Nur Wahidah Agustin Siregar and colleagues from Panca Budi Development University.
Author Profiles
- Nur Wahidah Agustin Siregar, S.Ak.: Researcher and accounting graduate at Panca Budi Development University, Medan, specializing in public sector accounting and regional financial governance.
- Deamarselina Hutagalung, S.Ak.: Researcher and accounting graduate at Panca Budi Development University, Medan, focusing on management control systems and public agency performance.
- Galih Supraja, S.E., M.Si.: Faculty member and lead researcher in the Accounting Study Program at Panca Budi Development University, Medan, specializing in regional financial management, public sector governance, and human resource management.
Source Information
- Article Title: The Effect of Management Control Systems and Human Resource Competence on Budget Absorption in Regional Government Organizations of Medan City
- Journal: International Journal of Contemporary Sciences (IJCS), Vol. 4, No. 6, 2026, Pages 1699–1714
- Publication Year: 2026
- DOI:
https://doi.org/10.55927/vgb9ez96 - Official URL:
https://journalijcs.my.id/index.php/ijcs
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