LOCAL BUDGETS STUDY 2010

Transcription

1 INTERIM REPORT LOCAL BUDGETS STUDY 2010 Local Budget Management Performance in 42 Kabupatens and Cities in Indonesia The Asian Foundation Seknas FITRA UKaid Royal Netherlands Embassy Translated into English by Denis Fisher from the Department of International Development 1

2 Acknowledgements This Report on Local Budget Management Performance is the result of cooperation between the National Secretariat of the Indonesian Forum for Budget Transparency (Seknas FITRA) and The Asia Foundation. The Seknas FITRA team was led its Secretary-General, Yuna Farhan, and included Fitra staff members Yenni Sucipto and Muhammad Maulana. The Asia Foundation s contribution was coordinated by R. Alam Surya Putra and Hana Satriyo. Taufik, Zulkarnain and Hari Kusdaryanto helped with data processing and logistics. The Report is based on findings of fieldwork undertaken by the following local researchers from 30 civil society organizations: Baihaqi, Yulianto and Mulyadi (GERAK Aceh), Rurita Ningrum (FITRA North Sumatra), Aryadie Adnan and Wibawadi Murdwiono (PKSBE West Sumatra), Fahriza (FITRA Riau), Ferry Triatmodjo and Rini Budi Astuti (Maarif Institute), Muhammad Fahmi (FITRA South Sumatra), Edi Surahman (Pinus/Mapag, North Gorontalo), Ben Satriatna (Sanggar Bandung), Khirzuddin, Syamsul, Drs. HA.Muhith Efendy and Syaiful Mustai n (Lakpesdam NU), Andwi Joko Mulyanto, Eko Adi Purwanto, Arifin, Dina Nur Solati, Rosihan Widhi Mugroho, Zaffaron, Asiswanto Darsono and Nur Hidayat (Pattiro), Nur Hadi (FITRA Tuban), Dwi Endah (PW Aisyiyah East Java), Eka (Lensa), Denywan Putra (Legitimed), Husni Anshori (YPKM), Milita Priatna Utami (LSBH), Zulkarnain (SOMASI) Andi Nilawati Ridha, Sudirman and Wildayanti (YLP2EM), St. Hasmah (LPP Bone), Masitah (Yasmib), Risnawati (KPPA), Arusdin Bone (LP2G), Lim Kheng Sia (Fakta) dan Muttaqien (Labda Jogjakarta). Members of the data verification team were: Hendriadi Jamaludin (Somasi), Rosniaty (Yasmib), Ermy Sri Ardhiyanti (Pattiro), Devi (Maarif Institute), Nunik Handayani (FITRA South Sumatra) dan Dahkelan (FITRA East Java) and Yenti Nur Hidayat (SANGGAR). This research was undertaken with support from the UK Department for International Development (DFID) and The Royal Netherlands Embassy. The opinions, findings and conclusions contained in this report are those of the civil society groups involved and should not be attributed to The Asia Foundation, DFID or the Royal Netherlands Embassy. 2

3 Table of Contents ACKNOWLEDGEMENTS 2 LIST OF TABLES AND ILLUSTRATIONS 5 GLOSSARY OF ABBREVIATIONS AND TERMS 6 CHAPTER I: FOREWORD: A MORE DETAILED LOOK AT LOCAL BUDGET PROCESSES 8 A. Background 9 B. Research Methodologies 9 1. Research Instrument and Scoring System Research Structure and Methods Documents Studied Reliability and Validity Index Categorization 12 C. Areas Studied 12 CHAPTER II: PERFORMANCE IN TRANSPARENCY OF LOCAL BUDGET MANAGEMENT14 A. Testing the Availability of Budget Documents 14 B. Institutional Support for Freedom of Information Services 17 C. Index of Transparency of Local Budget Management 18 CHAPTER III: PERFORMANCE IN PARTICIPATION IN LOCAL BUDGET MANAGEMENT20 A. Mechanisms for Participation and Categories of Participants 20 B. Regulatory Provisions on Public Participation 22 C. Index of Participation in Local Budget Management 23 CHAPTER IV: PERFORMANCE IN ACCOUNTABILITY OF LOCAL BUDGET MANAGEMENT 25 A. Timeliness 26 B. Mechanisms for Supply of Goods and Services 27 3

4 C. Opinions of National Audit Board 28 D. Index of Accountability of Budget Management 28 CHAPTER V: PERFORMANCE IN PROMOTING EQUALITY IN LOCAL BUDGET MANAGEMENT 30 A. Special Mechanisms for Womens Participation 30 B. Institutionalization of Gender Mainstreaming 30 C. Index of Performance in Gender Mainstreaming 32 CHAPTER VI: PERFORMANCE IN LOCAL GOVERNMENT MANAGEMENT 34 CHAPTER VII: RECOMMENDATIONS 37 4

5 List of Tables and Graphics Research Report TABLE 1.1 Documents Studied for KIPAD TABLE 1.2 Reliability of Dimensions and Cycles 11 TABLE 1.3 Correlations between Dimensions 11 TABLE 1.4 Correlations between Cycles 12 TABLE 1.5 Categorizations of Ratings of Areas Studied 12 TABLE 4.1 Regulatory Framework for Deadlines for Final Approval of Budget Documents 26 TABLE 4.2 Regulatory Framework for Timeframes for Discussion of Budget Documents 26 TABLE 4.3 Extent to Which Governments Studied Met Deadlines for Final Approval of Budget Documents 26 TABLE 6.1 Proportion of Local Govts Observing or Not Fully Observing Good Governance Principles TABLE 6.2 Proportion of Govts by Area Observing or Not Fully Observing Good Governance Principles36 36 GRAPHIC 1.1 Areas Studied in KIPAD GRAPHIC 2.1 Level of Public Access to Documents by Local Government Area GRAPHIC 2.2 Degrees of Access to Budget Documents GRAPHIC 2.3 Time Taken to Provide Documents GRAPHIC 2.4 Level of Accessibility of Budget Documents by Budget Cycle Phase GRAPHIC 2.5 Level of Access to Budget Documents by Title GRAPHIC 2.6 Areas with or without SOPs for FOI Requests GRAPHIC 2.7 Index of Performance in Transparency of Local Budget Management GRAPHIC 3.1 Mechanisms for Participation Provided by 42 Governments Studied GRAPHIC 3.2 Community Involvement by Consultative Mechanism Provided GRAPHIC 3.3 Differences between Participation Index of Areas with PIKs and those without PIKs GRAPHIC 3.4 Proportion of Areas Providing Mechanisms for Participation by Budget Cycle Phase GRAPHIC 3.5 Index of Performance in Participation in Local Budget Management GRAPHIC 4.1 Ways Used to Advertise Tenders in the 42 Kabupatens and Cities Studied GRAPHIC 4.2 Availability of Black Lists of Companies in the 42 Kabupatens and Cities Studied GRAPHIC 4.3 Index of Performance in Accountability of Local Budget Management GRAPHIC 5.1 Establishment of Gender Mainstreaming Institutions GRAPHIC 5.2 Use of Disaggregated Data for Certain Programs GRAPHIC 5.3 Proportion of Local Government Departments Headed up by Females GRAPHIC 5.4 Index of Performance in Gender Equality in Local Budget Management GRAPHIC 6.1 Performance in Local Budget Management Based on Good Governance Principles

6 GRAPHIC 6.2 Index of Performance in Local Budget Management

7 Glossary of Abbreviations and Terms (Compiled and inserted by translator) APBD (or APBD murni) APBD-P BPK CSIAP DPA DPA SKPD Pen/Kes/PU DPRD FGD FOI GBRI GM HoG ILPPD Kabupaten KIPAD KUA-PPAS Laporan Realisasi Smt I LKPD LKPJ Local government LPPD Musrenbang Perda Perda PTJ Pelaksanaan APBD Perkada Perkada Penjabaran APBD Perkada Penjabaran APBD-P Anggaran Pendapatan dan Belanja Daerah regional (local) government budget as approved Anggaran Pendapatan dan Belanja Daerah (Perubahan) revised local government budget Badan Pemeriksa Keuangan Republik Indonesia national Audit Board Civil Society Initiative against Poverty Dokumen Pelaksanaan Anggaran budget implementation document Dokumen Pelaksanaan Anggaran Satuan Kerja Peringkat Daerah/Pendidikan/Kesehatan/Pekerjaan Umum budget implementation document of the local government departments of education/health/public works Dewan Perwakilan Rakyat Daerah regional (local) legislative assembly: the legislative wing of government at the provincial, kabupaten and city level Focus group discussion freedom of information Gender Sensitive Budget Imitative Gender mainstreaming head of (local) government Informasi Laporan Pelaksanaan Pemerintahan Daerah information on regional governance implementation report. See also LPPD. The name of Indonesian local government area below the level of province and equal in status to a city. Kinerja Pengelolaan Anggaran Daerah Local Budget Management Performance Kebijakan Umum Anggaran Prioritas dan Plafom Anggaran Sementara General Budget Policies Provisional Budget Priorities and Funding Levels Laporan Realisasi Semester I report on implementation of local budget (APBD) for the first semester. Laporan Keuangan Pemerintah Daerah Local Government Fiscal Report Laporan Keterangan Pertanggung Jawaban Accountability Information Report any sub-national government (provincial, kabupaten and city) (pemerintah daerah) Laporan Penyelenggaraan Pemerintahan Daerah Regional Governance Implementation Report Musyawarah Perencanaan Pembangunan community consultations on development planning Peraturan Daerah local government regulation Peraturan Daerah Pertanggung jawaban Pelaksanaan APBD local government regulation on accountability of local budget implementation Peraturan Kepala Daerah head of local government regulation Peraturan Kepala Daerah Penjabaran APBD head of local government regulation on detailed implementation of local budget Peraturan Kepala Daerah Penjabaran APBD-Perubahan head of local government 7

8 regulation on detailed implementation of the revised local budget Permendagri PIK PKK Pokja Posyandu PP PPID Region Regional government Renja SKPD Pemda Renja SKPD Kes/PU/Pen RAPBD RAPBD-P RKA RKPD RPJMD SKPD SOP Sub-district UU (KIP) Peraturan Menteri Dalam Negeri Minister of Home Affairs regulation Pagu Indikatif tingkat kecamatan indicative funding figures at sub-district level Pemberdayaan Kesejahteraan Keluarga empowerment of family welfare Kelompok Kerja working group Pos Pelayanan Terpadu integrated health post Peraturan Pemerintah central government regulation Pejabat Pengelolaan Informasi dan Dokumentasi Office for the Management of Information and Documentation (Freedom of Information (FOI) office) any sub-national area (particular government areas: provinces, kabupatens and cities) any sub-national (local) government at the level of province, kabupaten or city Rencana Strategis Satuan Kerja Peringkat Daerah Pemerintah Daerah strategic plans of local government departments Rencana Strategis Satuan Kerja Peringkat Daerah Pemerintah Daerah Kesehatan/Pekerjaan Umum/Pendidikan Strategic plans of local government departments of health/public works/education Rancangan Anggaran Pendapatan dan Belanja Daerah draft local government budget Rancangan Anggaran Pendapatan dan Belanja Daerah (Perubahan) draft revised local government budget Rencana Kerja dan Anggaran Budget and Work Plans Rencana Kerja Pemerintah Daerah Local Government Work Plans Rencana Pembangunan Jangka Menengah Daerah regional medium-term development plan Satuan Kerja Pemerintah Daerah local government department (work unit) Standard Operation Procedures Kecamatan: administrative level immediately below kabupaten and city Undang Undang No. 14/2008 (Keterbukaan Informasi Publik) law on Freedom of Information 8

9 Chapter I Research Report Foreword: A More Detailed Look at Local Budget Processes A. Background This report on Local Budget Management Performance (KIPAD) in 2010 is a continuation of research undertaken last year on the same broad issues. The study examines four broad areas of sub-national (regional, local) government budgetary processes: planning when local governments undertake a range of activities to plan what needs to be done and to prepare draft budgets; discussion when governments discuss and make determinations about provisions of draft budgets; implementation during which governments carry out programs contained in endorsed budgets with funding appropriations contained therein; and, finally, accountability at which point governments have to account for implementation of budget programs and expenditure. This KIPAD research project was the brainchild of a network of NGOs which also developed and implemented it as a means of monitoring and evaluating local government budget performance. With support from The Asia Foundation, the National Secretariat of the Indonesian Forum for Budget Transparency (Seknas FITRA) organized the various research stages in collaboration with 28 like-minded groups in regional areas, including NGOs, other community groups and university research units. The research s overall aim was to assess the extent to which principles of good governance (transparency, participation, accountability and gender equality) were being integrated into local budgetary processes in areas studied. More specifically, it aimed to provide feedback to local governments to help them to lift their performance in budgetary cycles from start to finish. By looking at this report, local governments will be able to tell to what extent their budgetary processes are in accord with requirements outlined and to benchmark innovative practices put in place by other governments. The central government will hopefully also use the study as a chance to have a fresh look at national policies for improved sub-national budget performance throughout Indonesia. NGOs too should be able to use it as a resource for their advocacy work, particularly on budgetary issues especially pro-poor advocacy on budgets in areas studied. This report is based on the premise that decentralization can be relied upon to give local governments space to develop innovative policies in regions. Since decentralization was introduced in Indonesia, several innovative policies have been developed in regions aimed at enhancing people s welfare. Such innovations do not just benefit areas which introduce them, but also encourage other regions to adopt similar or even more progressive policy approaches. So, at the very least, this report seeks to engender a spirit of competition among local governments to help them become more efficient and effective managers especially of their budgets. 9

10 As budgets are an integral part of political process, they act as a vehicle for both executive and legislative branches of local governments to implement pro-people policies and programs. Any region s development depends in no small part on political decisions on budgetary issues. Thus a key factor determining people s well-being is the extent to which executive and legislative branches of local governments have the same perspectives on how local budgets should be framed. In other words, budgets determine the welfare of local communities. In making judgments on the various indicators researched in this report, researchers looked more deeply at issues involved than in last year s study. Thus to test transparency, researchers used legal provisions in freedom of information (FOI) legislation (known as UU KIP) and regulations to gain access to information. To test participation in budgetary processes, they identified more carefully than last year who was involved in budgetary planning and formulation processes. A closer study was also made of accountability of public tendering for supply of goods and services. And, finally, on gender issues, they more closely assessed how effective institutional and other arrangements were in promoting greater gender equality. B. Research Methodology The basic methodology used for KIPAD 2010 was similar to that used in the 2009 study. Research tools and indicators used this time were the same as for the previous study. Box 1.1 Important Findings of KIPAD 2009 Transparency Planning documents were more easily obtained than budgetary documents; ILPPDs were what local governments most often failed to produce; Documents on planning and budgets for specific sectors were more difficult to access than others; City governments performed better than kabupaten governments under this heading. Participation Opportunities for participation were fewer once the allocation of budgetary resources began; Local governments did not generally give indicative funding figures (PIK) for planned responses to suggestions; Most local governments did not provide mechanisms for accommodating community concerns; Cities scored best under this heading. Accountability The final adoption of many budget documents was delayed; Local legislative assemblies had insufficient time to study budget documents submitted by local governments; The majority of local governments received qualified audit reports from the national Audit Board. Gender Equality Not many focal points for gender mainstreaming (GM) had been set up; Local governments mostly did not have disaggregated data and those which did were not using it when formulating budgetary programs; Neither cities nor kabupatens distinguished themselves under this heading. But the research methodology used in 2009 was fine-tuned a little for KIPAD The changes (outlined in the following paragraphs) were based on inputs from various quarters, in particular local governments and NGOs, after publication of the first report. 1. Research Instrument and Scoring System 10

11 KIPAD 2010 s survey instrument contained 97 questions. These were designed to cover four elements or dimensions regarded as representative of good governance: transparency (42 questions), participation (15 questions), accountability (15 questions) and gender equality (25 questions). Each dimension was examined at various stages of the budgetary process, including planning (28 questions), discussion (24 questions), implementation (28 questions) and accountability (17 questions). 11

12 Available choices under each question were allocated a value (with the lowest score being 0 and the highest 100). Every question carried equal weight in index calculation, which ipso facto meant that each index ranged between 0 and 100. That made them easy to read and compare. An area s overall budget performance (KIPAD) index was calculated by taking the average of the answers to all 97 questions. The same applied to calculation of indices for each element of good governance (transparency, participation, accountability and gender equality). 2. Research Structure and Methods In line with the evidence-based approach used in this research, all answers had to be supported by solid evidence. Various tools were used to verify answers given: documentary evidence, interviews and focus group discussions (FGD). Every region studied had a specially trained assessor, who evaluated research done on the area concerned. Following that evaluation, assessors sent their findings to verifiers whose job it was not just to verify answers given but also to assess the extent to which supporting evidence was compelling. Verifiers positioned by geographical area were each responsible for between 5 and 8 assessors. No verifier could double as an assessor and making expert judgments was the preserve of verifiers. 3. Documents Studied This KIPAD study examined 21 different sorts of planning and budget documents. 19 of them were also studied in the 2009 study. One document studied last time, Local Government Medium Term Development Planning (RPJMD), was not considered this time because it was not available across regions. Two documents regarded as containing information important for local people were looked at for the first time this year: Local Government Accountability Reports (LKPJ) and the Local Governance Implementation Reports (LPPD)) Planning Documents Table 1.1 Documents Studied for KIPAD 2010 Discussion Documents Implementation Documents Accountability Documents Local government Pertanggungjawab General budget Local regulations 1st 6 mth report wo work plans policies (KUA) and on APBD & APBD-P APBD outcomes (RKPD). provisional budget HoG regulations Perda on public Work plans of three priorities & funding on APBD and APBD-P. accountability local government levels (PPAS). of APBD. departments (SKPD) Budget & work Budget LKPJ studied: public plans (RKA) in the Implementation Implementation LPPD (local works, 3 sectors studied: documents (DPA) Governance for 3 sectors education and public works, studied: Reports) education public works, and health. educat. & Validity 4. Reliability and The survey instrument s reliability is supported by three factors. Firstly, a verification tool was 12 3

13 used to minimize measurement errors during the research. In technical terms, verifiers evaluated assessors findings on the basis of evidence advanced and decided whether that evidence was sufficient to justify the findings. If evidence was judged to be insufficiently strong, assessors were obliged to produce another verification tool to support their findings. The re-verification of a finding could be accompanied by an inter-rater reliability test. A second source of support for our research instrument s reliability is the split-half test. For a research instrument containing 97 questions like that used in this study, it is more appropriate to use the split-half test than the so called Chronbach s Alpha test. The latter is sensitive to the number of questions asked, whereas the split-half test produced a correlation of between two sections of the instrument. That can be regarded as a strong correlation. A third source of support for the survey form s reliability comes from calculation of Chronbach s Alpha coefficients in the imaginary situation where the survey s 4 segments (each with its 4 cycles) are regarded as distinct research instruments. Table 1.2 shows that, in that situation, all 4 instruments have a satisfactory level of reliability and that even in the case of accountability which has the lowest Alpha values those values can be regarded as moderate. Table 1.2 Reliability of Dimensions and Cycles Instrument Total No. of Chronbach s Alpha Transparency Questions Participation Accountability Equality Planning Cycle Discussion Cycle Implementation Cycle Accountability Cycle The research instrument s validity is supported by the solid foundations on which its composition was based. Various legal requirements (enshrined in State law and regulations) were factored into their formulation in so far as they had a direct bearing on research content and validity. An attempt was made to ensure that every question was formally correct, thereby guaranteeing that the research instrument would elicit the information which it was intended to elicit and was therefore valid. A second argument supporting the research instrument s validity emerges when its four dimensions (each with its four cycles) are regarded as separate research instruments. When that is done, it becomes evident that the four dimensions and cycles studied are in fact interrelated in ways in which they should interrelate in theory. Such interrelationships are 13

14 evidence of a high level of convergent validity. Tables 1.3 and 1.4 provide details of the correlations between the four dimensions and cycles. Table 1. 3 Correlations between Dimensions Transparency Participatio Accountability Equality Transparency n.336 *.801 ** Participation **.458 ** Accountabilit ** y Equality 1 Table 1.4 Correlations between Cycles Planning Discussion Implementatio Accountability Planning **.719 n.537 ** Discussion **.621 ** Implementatio ** n Accountability 1 5. Index Categorization Unlike the 2009 KIPAD, this study attempts to break new ground by categorizing areas studied as very good, good, adequate or poor. These categorizations were arrived at on the basis of expert judgment. Specifically, researchers answered every question in the questionnaire and made judgments about what answers they might well have expected to receive. For example, on question No.1 concerning public access to regional Government Work and Budget Plans (RKPDs), researchers would take the view that, given its importance, a very good government should have made this document available within 1-10 days, a good government within days and an adequate one sometime after 17 days. By contrast, in response to question No. 79 on when local governments presented revised budgets (APBD-P) to local legislative assemblies (DPRDs), a very good performance would have been before October, while submission during October would be regarded as good or satisfactory. This method of categorization was assessed as being superior to a method which arbitrarily attributed values to differing performance levels. Use of expert judgment allowed researchers to apply their knowledge to local situations and to make judgments about them based on existing regulatory requirements. By contrast the arbitrary values 14

15 approach was regarded as not sufficiently sensitive to differing local dynamics or to the extent to which local situations were in accord or not with what researchers might have expected to find. Table 1.4 allocates values to various categories within the KIPAD index. Table 1.5 Categorization of Ratings of Areas Studied Category Index rating Index rating Index rating Index rating KIPAD Index Transparency Participation Accountability Equality Overall Rating V. good Good Adequat e Poor C. Areas Studied This research was conducted in 42 kabupatens and cities marked on the following map (see Graphic1.1) The areas studied were target areas of the Civil Society Initiative against Poverty (CSIAP) and the Gender-Responsive Budget Initiative (GBRI) developed by The Asia Foundation with local partners. CSIAP and GBRI had virtually the same objectives, namely to bolster the role of civil society groups (both NGOs and other community organizations) in changing local budgetary policies to make them more pro-poor and gender-responsive. CSIAP was supported by the UK Department for International Development (DFID) and GBRI by the Royal Netherlands Embassy. Graphic1.1 Areas Studied in KIPAD 2010 AREAS STUDIED IN KIPAD

16 Chapter II Research Report Performance in Transparency of Local Budget Management Law No. 14/2008 on Freedom of Access to Public Information (UU KIP) is based on article 23, paragraph (1) of the Constitution which states that the State budget shall be implemented in an open and accountable manner in order to best attain the prosperity of the people. UU KIP guarantees the right of every citizen to obtain information from public institutions including sub-national governments, including information and documents on budget management. The following formal legal provisions require that budget management processes be transparent: 1. Article 23 of the 1945 Constitution: The State Budget, as the basis of the management of state funds, shall be determined annually by law and shall be implemented in an open and accountable manner in order to best attain the prosperity of the people 2. Article 3 paragraph (1) of Law 17/2003 concerning State Finances: The nation s finances shall be managed in an orderly way, in accordance with the provisions of law, efficiently, economically, effectively, transparently and accountably, keeping justice and propriety front and centre. 3. Article 5 of Law No. 10/2004 concerning Enactment of Legislation: The formulation of regulations issued to enact legislation must be based on good principles of law enactment which include clarity of objectives, appropriate institutional arrangements, consistency of content, ability to be implemented, ease of use, outcomes-focused, clarity of formulation and transparency. 4. Article 23 paragraph (2) of Law No. 32/2004 concerning Regional Government: The management of regional government finances referred to paragraph (1) shall be conducted efficiently, effectively, transparently, accountably, correctly, justly, appropriately and in conformity with law. 5. Article 4 of Government Regulation No. 58/2005 concerning Management of Regional Government Finances: Regional government finances shall be managed correctly, in accordance with law, efficiently, effectively, transparently and accountably, keeping in mind principles of justice, propriety and being of benefit to the people. Two indicators were used in this study to measure transparency performance. Firstly, to test observance of the law on FOI (UU KIP), the study sought to assess how readily budget management documents were made publicly available. Second, the extent to which local governments had made institutional arrangements to service FOI requests from the public was assessed. Both these indicators aimed at assessing the level of local governments transparency in terms of both their granting of routine public access to information at each part of the budget cycle and their being prepared to implement UU KIP s provisions. A. Testing the Availability of Budget Documents The study tested freedom of access to public information using the procedures for making FOI requests laid down in UU KIP. Responses were sorted into several categories: documents already in the public domain; documents made available within 0-10 working days of receipt of requests; documents provided within working days of lodgment of requests; documents supplied after more than 17 days; documents produced internally but not provided publicly; and documents not produced at all. 16

17 UU KIP was a quite powerful incentive for local governments to start being open to FOI requests. Of the 882 documents for which researchers submitted requests, 56% were obtained via formal lodgment of FOI requests. In fact, 5% of the documents sought were already in the public domain (on websites or in other Kab. Malang Kota Blitar Kab. Kendal Kota Surabaya Kota Pare- Pare Kab. Semarang Kab. Sleman Kab. Bone Kab. Garut Kab. Boyolali Lombok Tengah Lombok Timur Kab. Bojonegoro Kab. Sidrap Kota Banjar Kab. Sumedang Kota Semarang Kota Surakarta Dompu Sumbawa Barat Lombok Barat Sergai Pekan Baru Padang Panjang Padang Bandar Lampung Kota Palembang Aceh Utara Aceh Besar Aceh Barat Kab. Bondowoso Kab. Situbondo Kab. Gorontalo Utara Kota Gorontalo Kota Palu Kab. Wajo Kab. Polman Kota Pontianak Kota Palangkaraya Kota Pekalongan Kab. Pekalongan Kab. Cilacap Already published Obtained within working days Produced but access not given obtained between 1-17 working days obtained after more than 17 working days not produced mediums accessible to the public). The kabupaten of Malang performed best in this area, publishing on its website more documents than any other area. Of the 21 documents which the kabupaten of Malang was asked to Graphic 2.1 Level of Public Access to Documents by Local Government Area supply, 8 or almost 40% had already been published on its website, among the most important being its APBD and APBD-P. 17

18 Only five areas (the kabupatens of Semarang, Bone and Serdang Bedagai and the cities of Pekalongan, and Padang Panjang) furnished all the budget management documentation requested either in a form already published or in response to researchers formal requests. The study found that 35% of the documents sought could not be accessed, even though formal requests for access had been lodged. Either deadlines set for receipt of documents were not met or requests for access to documents were simply ignored. Areas providing the least number of budget documents in response to researchers formal requests were the kabupatens of North Aceh and Wajo, which each refused to release 17 documents. Among those documents were, most importantly, local departmental work and budget plans (RKA SKPD) on education, draft local budgets (RAPBDs), mid-year revised budgets (APBD-Ps) and detailed instructions on how APBD- Ps were to be implemented. The time taken to obtain copies of budget documents which were received was generally fewer than 17 days. This showed that the provisions of UU KIP imposing a 17 day limit as the timeframe in which public institutions have to provide information were an effective incentive for local governments to meet the legally prescribed deadline. The study showed that 87% of all the documents formally requested were supplied in fewer than 17 working days. Indeed 56% arrived in fewer than 10 working days. Only 12% came to hand after more than 17 days but all were received within 20 days. Budget planning documents were more easily obtainable than budget discussion, implementation and accountability documents. Planning documents Graphic 2.2 Degrees of Access to Budget Documents Not printed Not accessible Obtained by request Published Graph 2.4 Level of Accessibility of Documents By Budget Cycle Phase Planning Discussion 48.1 Implementation 49.7 Accountability 56.5 Graph 2.3 Time Taken to Provide Documents were generally expositions on proposed work programs and overall budget policy directions without any information on proposed spending per activity or program. The five budget documents which were most easily accessed were: Local Government Work Plans (RKPD); General Budget Policies, Provisional Priorities and Expenditure Levels (KUA-PPAS); local government budget regulations (perda); Accountability Information Reports (LKPJ) submitted by local governments to local legislative assemblies; and local head of local government regulations on implementation of approved budgets (Perkada Penjabaran APBDs). Budget implementation documents generally contained detailed funding information as well as details on the number and location of funded activities. It was difficult to gain access to such documents because of > 17 working days working days 1-10 working days 18

19 the detailed funding information they contained information regarded as secret and accessible only for government officials with a need to know. By contrast, anyone could have access to planning documents because they contained no details of funding to be provided. This study found that the hardest documents to access were Budget and Work Plans (RKAs) for local government departments responsible for education and public works, apparently because they contained even more information on funding than documents used as a guide for budget implementation (DPAs). Regional Governance Implementation Reports (LPPDs) were the most widely published of all local budget documents. Twelve (29%) of local governments studied had published their LPPDs on their websites in accordance a requirement in PP No.3/2007 that LPPDs be published in both electronic and written form. This situation was especially interesting given that KIPAD 2009 concluded that LPPDs were least likely to be produced at all by local governments. Access to regional government regulations (perda) on APBDs (as originally approved) and on implementation of APBDs was somewhat easier for this study. But perda on revised budgets (APBD- Ps) and head of government regulations on implementation of APBD-Ps remained the most difficult to obtain of the 21 documents sought. In 55% of all 42 areas studied perda on APBD-Ps were unobtainable. By contrast, documents on APBDs and their implementation were available in 70% of areas studied. This situation served to reinforce suspicion of many that real power play over budgets occurs not so much when APBDs are approved but rather when they are revised mid-year. Another angle here is that central government sanctions imposed on regional governments for lack of timeliness in budget approval More really serious political negotiation on budgets occurs during the process of approving Perda on APBD- Ps, than during approval processes for Perda on the original budget (APBD murni). (Khairiansyah Salman, Expert Staff, national Audit Board) are applicable only to the original APBDs and not to mid-year revised APBD-Ps. Graphic 2.5 Level of Accessibility of Budget Documents by Title (See Glossary (page 6) for explanation of abbreviations of titles of documents referred to in this graphic) 19

20 RKPD Renja SKPD Pend. Renja SKPD ke. Renja SKPD PU KUA-PPAS RKA SKPD Pend. RKA SKPD Kes. RKA SKPD PU RAPBD Perda APBD Perkada Penj. APBD Perda APBDP Perkada Penj. APBDP DPA SKPD Pend. DPA SKPD Kes. DPA SKPD PU Lap. Realisasi Smt I Perda PTJ pelaksanaan APBD ILPPD LPPD LKPJ B. Institutional Support for Freedom of Information Services Research Report Most local governments had yet to establish offices for management of information and documentation (PPIDs) to provide freedom of information (FOI) services. Only nine areas studied the cities of Surakarta, Gorontalo, Bandar Lampung and Padang and the kabupatens of Sumedang, Bojonegoro, Aceh Besar, North Aceh and Serdang Bedagai had established some kind of PPID in accordance with FOI law (UU KIP) which requires all public institutions to set up PPIDs. Other areas had not done so, perhaps understandably, because UU KIP s enabling regulation (PP No. 61/2010) set August 2011as the deadline for the establishment of PPIDs. 1 Box 2.1 Functions and Role of Office for the Management of Information and Documentation (PPID) An Office for Management of Information and Documentation (PPID) will be an office with responsibility for the storage, documenting and provision of public information and/or the provision of freedom of information services to the public. The role and responsibility of the PPID will be to manage the process of providing freedom of information services, including processes relating to the storage, documentation, and provision of public information and freedom of information services. The PPID will have the task of gathering information from all areas of the public institution under the direction of the head of institution. (Source: : Law No. 14/ 2008 and Central Information Commission Regulation No.1/2010) Most local governments did not have standard operating procedures (SOP) for handling freedom of information (FOI) requests. For the purposes of this study, a SOP was taken to mean Graphic 2.6 Areas With or Without SOPs No SOP for FOI requests, 27 With SOP for FOI requests, 15 Planning Discussionn Already published Obtained by request within working days Produced but unobtainable Implementation Accountability Obtained by request within 1-10 working days Obtained by request after more than 17 workdays Not produced information issued by a local government on procedures to be followed by the public to gain access, in a structured and institutionalized way, to public information, including on budgets. Only fifteen of the areas studied had SOPs for handling FOI services established by local government regulation or otherwise. In four areas the kabupatens of Garut and Sumedang and the cities of Blitar and 1 Article 21 paragraph (1) of Government Regulation No. 61/2010 (which entered into force on 23 August 2010) reads: PPIDs must be established within one year, at the latest, of the entry into force of this regulation. 20

21 Palembang a head of government regulation (perkada) had been the vehicle. C. Index of Transparency of Local Budget Management Based on the above findings, the overall level of transparency of budget management of local governments studied was categorized as adequate. Although no single area could be put in the category of having a very good level of transparency, ten were classified as having a good level of transparency. Highest on the list was the kabupaten of Bone, followed by the kabupaten of Serdang Bedagai and the city of Pandang Panjang. In Bone researchers were able to gain access to all documents sought within 1-10 working days of requests being lodged. The documents obtained included those which were hard to access in other areas. They included revised budgets (APBD-Ps); implementing regulations for APBD-Ps; and work and budget plans (RKAs) and budget implementation guidelines (DPAs) of local departments of education, health and public works. Bone had also published its regional government work plans (RKPD) and information reports on regional governance implementation (ILPPDs). The performances of Serdang Bedagai and Pandang Panjang matched that of Bone, except that they took longer to provide some documentation (11-17 working days). Seventeen governments were classified as having an adequate level of transparency and fifteen as having a poor level. Within the latter group the kabupaten of Wajo was ranked lowest. Not only had many of Wajo s budget documents not been published, they had also not been made publicly available even in response to formal freedom of information requests. 21

22 Graphic 2.7 Index of Transparency of Local Budget Management Kab. Bone Padang Panjang Kab. Malang Sergai Kab. Polman Kab. Semarang Kab. Sleman Kab.Kendal Aceh Besar Sumbawa Barat Lombok Timur Kab. Bojonegoro Padang Kab. Gorontalo Utara Kota Pekalongan Kota Surakarta Bandar Lampung Kota Pontianak Kota Palangkaraya Kota Pare- Pare Kab. Pekalongan Lombok Barat Kota Palu Kab. Situbondo Kab. Garut Kab. Sidrap Kota Semarang Aceh Barat Lombok Tengah Kota Blitar Kab. Boyolali Kota Palembang Kab. Sumedang Dompu Pekan Baru Kota Surabaya Kota Banjar Aceh Utara Kab. Bondowoso Kota Gorontalo Kab. Cilacap Kab. Wajo Category Score Very good level of transparency Good level of transparency Adequate level of transparency Poor level transparency

23 Chapter III Research Report Performance in Participation in Local Budget Management Public participation is an important indicator of good governance. A participatory approach demands that a government treats people as active participants in development activities and budget management. That means that people should be involved in every decision making process. Indonesia s legal regulatory framework guarantees the right of people to be involved in the formulation and determination of public policy. Law No. 25/2004 concerning Development Planning Systems and Law No. 32/2004 concerning Regional Governance both provide for public participation in the development planning process. It is every citizen s right to share responsibility for the public domain, for bringing together issues of concern, for planning community agendas and for overseeing the performance of elected representatives and governments to ensure that they faithfully discharge popular mandates. This applies especially to political decisions on development and budgetary issues that impact directly on people s welfare. Following are details of provisions in Indonesian law on public participation: 1. Article 53 of Law No. 10/2004 concerning Enactment of Legislation reads: The people shall have the right to provide oral and written inputs for preparation and discussion of draft local government laws and regulations. 2. Article 139 of Law No. 32/2004 concerning Regional Governance reads: The people shall have the right to provide oral or written inputs for preparation and discussion of draft local government regulations. 3. Article 2 paragraph (4) point d, Article 5 paragraph (3), Article 6 paragraph (2) and Article 7 paragraph (2) of Law No. 25/2004 concerning Development Planning Systems stipulate that development planning shall make optimal use of the involvement of the people. Two indicators were used to measure performance in facilitating public participation. Firstly, the study looked at the extent of existing mechanisms for public participation and who was invited to use them. Second, it examined the content of local government regulatory provisions on public participation in budget management. Public participation indicators were based on answers to 15 questions in the research instrument. A. Mechanisms for Participation and Categories of Participants Local governments still had only limited mechanisms for public participation in budgetary processes. The only mechanism consistently used by local governments was what is termed musrenbang (community consultations on development planning). Beyond that, executive branches of local governments conducted very little public consultation when preparing draft budgets (RAPBDs), 23

24 revised budgets (APBD-Ps), basic documentation on budget policies and funding (KUA-PPASs) and accountability documentation. That said, the study found that local legislative assemblies (DPRDs) were starting to take the initiative in this area. They were consulting more widely than the executive by holding public consultations on the documents referred to above. In fact, researchers found that 50% of DPRDs were holding such public consultations before taking decisions on these documents. Of the three local government departments surveyed, public works was worst at providing mechanisms for participation. 24

25 Kab. Situbondo Kab. Wajo Kota Palu Kota Gorontalo Kota Palangkaraya Kab. Sidrap Kota Pare-Pare Kab. Gorontalo Utara Aceh Barat Aceh Utara Bandar Lampung Lombok Barat Dompu Sumbawa Barat Kab. Pekalongan Kab. Semarang Kota Pekalongan Kota Semarang Kab. Garut Pekan Baru Kab. Kendal Kota Surakarta Kab. Sumedang Kab. Bone Lombok Tengah Kab. Bondowoso Kab. Bojonegoro Kota Surabaya Kab. Sleman Kota Pontianak Kab. Boyolali Kab. Cilacap Kota Banjar Kota Palembang Kab. Polman Kota Blitar Aceh Besar Padang Panjang Lombok Timur Kab. Malang Padang Sergai JNo. of Mechanisms usei Research Report The kabupatens of Serdang Bedaga and Malang and the city of Padang were more innovative than other areas in providing mechanisms for public participation in budgetary processes. These three areas employed all the consultative mechanisms used in the study as measures of performance in participation. These results show that overall people are being provided with increasing opportunities to have a say in the formulation of local budget policies Comments on LKPD Pub Cons (in DPRD) on PTJ APBD Public Consult (in DPRD) on RAPBD Pub Cons (in DPRD) on KUA- PPAS Pub Cons on PTJ APBD Public Cons on RAPBD Pub Consultations on KUA- PPAS Musrenbang Pub For Pub Works Public Forum on Health Public Forum on Education Graphic 3.1 Mechanisms for Participation Provided by 42 Governments Studied Public participation especially of women, NGOs and delegates to community development conferences (musrenbang) was at its height during the musrenbang process but fell away when discussion of budget documents (KUA PPASs and APBDs) commenced. Professional organizations and institutions of higher education consistently played a greater role in any public consultation process Percentage of Participation by Community Group The h capped other groups Womens groups NGOs private companies musrenbang. Professional organizations local assembles drafting team 25

26 than other community groups. A more complete picture is provided in Graphic 3.2. Graphic 3.2 Community Involvement by Consultative Mechanism Provided Public discussion of APBD Pub. Part. in framing APBD Public discussion of KUA- PPAS Pub. Part. In framing KUA- PPAS musrenbang Public Works Cons Public forums on education Public forums on education 0% 20% 40% 60% 80% 100% 26

27 Padang Padang Panjang Kab. Bojonegoro Kab. Boyolali Kota Banjar Kota Blitar Sergai Kab. Sumedang Kota Pontianak Aceh Besar Kab. Cilacap Kota Semarang Kab. Semarang Kab. Sidrap Kab. Gorontalo Utara Aceh Barat Kab. Situbondo Kota Palangkaraya Dompu Kota Gorontalo Kab. Wajo Aceh Utara Bandar Lampung Lombok Barat Lombok Tengah Pekan Baru Kota Pare-Pare Kota Palu Sumbawa Barat Kab. Garut Kab. Bondowoso Kab. Kendal Kota Surabaya Kab. Bone Kab. Sleman Kab. Polman Kab. Pekalongan Kota Pekalongan Kab. Malang Lombok Timur Kota Palembang Kota Surakarta Participation Index Score Research Report Suggestions put forward during the musrenbang process were not taken up and funded. In the main, musrenbang consultations were a formality used to hear what people wanted without any follow up in terms of funding. More than 60% of governments studied did not provide indicative funding figures at the sub-district (kecamatan) level (known as PIK). As a result, musrenbang discussions were just so much hot air; and there was no one in a position to follow up on them to make sure that suggestions were funded in APBDs. On the basis of the correlations carried out in this study, it emerged that governments with PIKs in place (38% of those studied) tended to have more public participation than those without them Had PIKs Did not have PIKs Graphic 3.3 Participation Indices of Areas with PIKs and Those without PIKs B. Regulatory Provisions on Public Participation Existing local government regulations provided a disappointing basis for development of public participation in ways which met people s needs. Although more than 60% of areas studied had regulations in place guaranteeing public participation in budgetary processes, public involvement was nonetheless largely confined to development planning conferences (musrenbang). It was not so evident in subsequent processes, where real budget negotiations occurred. Indeed this study concluded just that: public consultation dropped away once budget cycles entered the discussion phase (Graphic 3.4). 27

28 % of Areas Providing Mechanisms for Public Participation, Musrenbang Kab/ City Public Forum on Education Public Forum on health Pub Works Forum Public Cons on perda on APBD (in DPRD) Public Cons on KUA- PPAS (in DPRD) Public cons on k KUA- PPAS Public cons on draft APBD Public cons on draft reg on Phi APBD (in DPRD) Public Cons on PTJ APBD Providing Feedback on LKPD 6 8 Research Report Graphic 3.4 Areas Providing Mechanisms for Participation by Budget Cycle Phase (%) The enactment of local regulations on public participation in budget planning did not of itself increase public participation levels in areas studied. After comparing areas with such regulations and those without them, researchers concluded that neither group stood out as having more or less public participation in budgetary processes. One reason for this situation might have been that local regulations were replications of central government regulations on participation in musrenbang processes. They did not, therefore, provide a good legal basis for developing public participation in budget management processes. Indeed there were indications that in some areas public participation was trending downwards. Local governments generally provided mechanisms for taking people s complaints on board. Thirty nine (39) governments had established one or more of the following mechanisms: conduct of a specific complaints-related activity; a special complaints unit; or a database for community complaints. 16 areas had conducted special activities and 15 had established special units. But only 8 governments had set up special databases for registration of people s complaints. Generally speaking none of these mechanisms was enshrined in local regulations, so their continuation could not be guaranteed. The kabupatens of Sleman, Bone and Sumedang and the city of Surakarta were each using all three of the above mechanisms. C. Index of Participation in Local Budget Management On average, the performance of governments under study in terms of public participation in budgetary processes was disappointing. All but two areas surveyed the cities of Padang Panjang and Padang were categorized as having a poor level of public participation. This situation was very worrying because it showed that both national and regional legislative frameworks were too weak to foster greater public participation in budget management processes. The cities of Padang and Padang Panjang were ranked most highly for their levels of public participation in budget management processes. This ranking for Padang was justified by the high level of commitment of the city s executive and legislative branches of governments to using creative ways to involve people in budget management processes. In addition to mechanisms for participation laid down in government regulation, Padang held public consultations (or public hearings within the DPRD) to encourage people to provide inputs for preparation of budgetary documents. But Padang had no mechanism in place to accommodate community complaints about public services. Nonetheless, these two areas used almost all public consultation mechanisms currently in use. Both _ _ Planning Discussion and Adoption Accountability 28

29 also had a local regulatory framework supportive of public participation and mechanisms for accommodating complaints from the community (sic). In addition they both had indicative funding figures (PIK) by sector and geographical area, thereby guaranteeing that community suggestions could be accommodated in budgetary processes. There were more cities than kabupatens among the five areas rated most highly on the public participation index. But that did not mean that cities studied were best at including people in budget management processes. After all, several city governments were ranked in the middle and towards the bottom of the index. The key factor determining an area s level of public participation was the level of commitment of its government be it city or kabupaten. 29

30 ka b/cities Research Report Graphic 3.5 Index of Performance in Public Participation in Local Budget Management Padang Padang Panjang Kota Surakarta Kota Palembang Lombok Timur Kab. Bojonegoro Kab. Boyolali Kota Banjar Kota Blitar Kab. Malang Sergai Kab. Sumedang Kota Pekalongan Kota Pontianak Aceh Besar Kab. Pekalongan Kab. Cilacap Kota Semarang Kab. Polman Kab. Sleman Kab. Bone Kota Surabaya Kab. Kendal Kab. Semarang Kab. Bondowoso Kab. Sidrap Kab. Garut Sumbawa Barat Kota Palu Kota Pare- Pare Pekan Baru Lombok Tengah Kab. Gorontalo Utara Lombok Barat Bandar Lampung Aceh Utara Aceh Barat Kab. Wajo Kota Gorontalo Dompu Kota Palangkaraya Kab. Situbondo mark Category Score Very good level of participation Good level of participation Sufficient level of participation Poor level of participation

31 Chapter IV Research Report Performance in Accountability of Local Budget Management The principle of public accountability requires that local governments should be held to public account for every policy they implement (including budget management policies). After all, ordinary people are the rightful beneficiaries of government policies. This principle requires that those responsible for implementing government policies and programs should be transparently accountable to those affected by what they do. It is, after all, the latter group that is entitled by right to know how government policies and programs have been carried out. Accountability also demands that a government agency be prepared to receive a critique of both its successes and failures in fulfilling its mission to achieve goals and targets set for it from time to time. Thus every government agency has the responsibility to render an account of its management of resources at every stage of the process (from planning, through implementation, to evaluation). 2 Following are details of provisions in Indonesian law on public accountability: 1. Article 23 of the 1945 Constitution: The State budget, as the basis of the management of State funds, shall be determined annually by law and shall be implemented in an open and accountable manner in order to best attain the prosperity of the people 2. Article 3 paragraph (1) of Law 17/2003 concerning State Finances: The State s finances shall be managed in an orderly way, in accordance with the provisions of law, efficiently, economically, effectively, transparently and accountably, keeping justice and propriety front and centre. 3. Article 23 paragraph (2) of Law No. 32/2004 concerning Regional Governance: The management of regional finances referred to paragraph (1) shall be conducted efficiently, effectively, transparently, accountably, correctly, justly, appropriately and in conformity with law. 4. Article 4 of PP No. 58/2005 concerning Management of Regional Finances: Regional finances shall be managed correctly, in accordance with law, efficiently, effectively, transparently and accountably, keeping in mind principles of justice, propriety and being of benefit to the people. Three indicators were used to measure the performance of local governments in the area of 2 See Max H Pohan s, Mewujudkan Tata Pemerintahan Lokal yang Baik (Good Governance) dalam Era Otonomi Daerah, a paper presented to the third round of large-scale consultations on development in the area of Musi Banyuasin, Sekayu, 29 September 1 October

32 accountability. Firstly, the study assessed the timeliness of both production of local budget documents and of decisions on them. Such timeliness was regarded as being a crucial part of budget management: Not only did it affect program implementation and provision of public services; it also had a potentially significant impact locally and could result in imposition of central government sanctions. Second, the study looked at local government mechanisms for the supply of goods and services. This involved a close examination of local government public tendering processes and the extent to which black-lists of companies banned from tendering existed. Third, researchers reviewed national Audit Board reports on the budgetary performance of governments surveyed. 32

33 A. Timeliness In assessing the timeliness of both production of local budget documents and decisions on them, researchers were guided by existing legal provisions. Table 4.1 outlines deadlines set by current central government regulations for both preparation and adoption of various budgetary documents. Table 4.1 Regulatory Framework for Deadlines for Final Approval of Budget Documents Document Deadline for Final Approval Basis in Law RKPD End of May PP No. 58 / 2005 Art. 33 para (2) Hm Affairs Min Reg. 13/ 2006 Art. 82 Para 2 APBD The beginning of December immediately preceding the start of the fiscal year PP No. 58 / 2005 Art. 45 para (1) Home Affairs Min Reg. 13/ 2006 Art. 104 Para (2) APBD-P 3 months before the end of the fiscal year Home Affairs Min Reg. 13/ 2006 Art. 172 Para (5) The timing of discussion of planning and budgetary documents is governed by the following regulations: Table 4.2 Regulatory Framework for Timeframes for Discussion of Budget Documents Document Submission Date Basis in Law KUA-PPAS Start of June Hm Affairs Min Reg. 13/ RAPBD First week of October Home Affairs Min Reg / 2006 RAPBD-P Second week of September Home Affairs Min Reg. 13/2006 Art. 172 para (2) The study showed that many budget documents were in fact finalized and submitted to local legislative assemblies (DPRDs) in accordance with these prescribed timeframes. This situation differed from the findings of KIPAD 2009, which found that many areas were slow to finalize their planning and budgetary documents and that late presentation of documents meant that DPRDs did not have enough time to discuss them properly. Thus KIPAD 2010 indicates that regional government efforts to implement accountable fiscal management procedures have paid dividends. Table 4.3 Proportion of Governments Meeting Deadlines for Final Approval of Budget Documents Document Final approval date prescribed in law Performance of governments studied RKPD End of May 50% of governments did not met this deadline: APBD APBDP LKPJ The beginning of December before start of current fiscal year 3 months before end of current fiscal yearr (beginning of October) To be submitted to DPRDs by the month of June immediately after end of fiscal year approval and adoption occurred after May 70% of governments met this deadline Almost 80% of governments met this deadline More than 50% of governments did not meet this deadline The document outlining regional government work plans (RKPD) was the only budget document which was, in most cases, not approved and adopted on time by local governments. This situation not 33

34 only violated existing government regulations but also affected subsequent budget policy formulation processes by holding up discussion and approval of other budget documents. In particular, given that RKPDs are essential inputs in KUA-PPASs (basic policy documents on budget policies and spending levels), their late appearance meant that KUA-PPASs were submitted late to DPRDs. And that impacted on preparation and approval of subsequent budget documentation, including draft APBDs themselves. Despite all that, only 17 of the governments surveyed observed legal deadlines for final adoption of RKPDs and submission of the KUA-PPASs to DPRDs. Even though in most cases draft APBDs were submitted late to local DPRDs, they were generally submitted during October and thus were adopted and ratified as approved budgets (APBD murni) by the December deadline. This same applied to revised budgets (APBD-Ps). B. Mechanisms for Supply of Goods and Services Local governments did not use a uniform system for the supply of goods and services. Most had established procurement models as bases for provision of such goods and services. Only 13 of the areas studied were found not to have such models in place. Although this was a small number, the lack of procurement models warranted serious attention because their absence provided greater opportunity for corrupt practices. Inadequate procurement models could also open doors for corruption. In general, local governments used open public tender s. Tenders were mostly advertised in the media, though some governments used websites. Six governments the kabupatens of Boyolali, Cilicap, Sleman and East Lombok, and the cities of Pekalongan and Surabaya completed tender processes online. That meant that those tendering could obtain information and submit tenders irrespective of their location. This online approach was rated highly, given that it provided very little, if any, opportunity for corruption. It also meant that direct contact between tender board members and those tendering was very limited. Graphic 4.1 Ways Used to Advertise Public Tenders in 42 Kabupatens/Cities Studied Public tenders not publicized Public tender notices posted on a notice board Public tenders advertised in the media Public tenders advertised on a website, but tender process not completed online Public tenders advertised on a website and tender process completed online Number of Kabupatens/Cities 30 No information held on black listed companies Did not supply or publish information Yes, supplied information, but did not publish it. Yes, supplied information and published it online or in media limited the scope for good or service. Most governments had a price structure for goods and services which was revised every 15 year. Such a structure, which was generally enshrined in local head of government regulations, 10 was a basic reference point for supply of goods 14 and services. It placed a ceiling on the amount of funding that would be used in supplying goods and services in an effective, efficient and accountable way. A fixed price structure also malpractices like price mark-ups for a particular No of Kabupatens/Cities 34

35 The study also showed that in general local governments either had no information on companies black listed from supplying goods and services or did not publish information they held. In fact, 15 governments had not even heard of the black listing procedure, even though it has been part of Indonesian law since the appearance of Presidential Regulation No. 54/2010 concerning the Provision of Goods and Services. That regulation spelt out clearly that companies which performed badly in supplying goods and services should be placed on a black list; that, once black-listed, companies could not take any part in supplying goods and services for two years; and that black lists should be made public. C. Opinion of National Audit Board An examination of national Audit Board (BPK) opinions on the financial management of local governments studied revealed quite a change since KIPAD That report recorded that five governments in East Java had received disclaimer opinions (no opinion offered). In 2010 most governments studied received qualified opinions ; four received disclaimer opinions ; and one an adverse opinion. All areas in East Java included in KIPAD 2010 received qualified opinions. Although most governments studied received quite favorable BKP opinions, an important body of work remains to be done by DPRDs in overseeing follow up on BPK findings. Researchers suspected that many local governments took no follow up action at all on BPK findings, which were non-binding. Thus, in their role as institutions charged with oversight of local government, DPRDs should exercise control over governments follow-up on audit reports. One way of doing that would be to encourage local governments to accept that such follow-up should be obligatory. What Semarang has done in this area is a Graphic 4.2 Availability of Black Lists of Companies in 42 Kabupatens/Cities Studied good case study for all concerned (see Box 4.1). 3 35

36 Box 4.1 Semarang follows up on Findings in National Audit Board (BPK) Opinions On the initiative of the City of Semarang s DPRD, the local government regulation (perda) on Accounting for the Implementation of the 2009 APBD, as finally adopted, contained a provision on the need for the government to take follow up action on the BPK s audit report on the 2009 budget. This measure represented a formal move by the legislature to get the executive to genuinely follow up on BPK reports, bearing in mind that previous BPK findings had vanished into thin air without any follow-up at all. By incorporating a requirement for such follow-up into a perda, the DPRD will be able to verify whether or not government has taken the BPK s findings on board. Some of those findings were referred to specifically in the perda concerned: Provision of land for a water retention pond potentially costing Rp 2.7 billion more than the price determined in the appraisal process. Inclusion, without supporting evidence, of an amount of Rp 17 billion as tax owing for advertising. Source : Ari Purbono, Presentation on Monitoring the Audits of Local Budgets, 2011 D. Index of Accountability of Budget Management On average local governments studied were found to have an adequate level of accountability in their financial management. Just two areas (the kabupaten of Sleman and the city of Pekalongan) were assessed to have displayed a very good level of accountability, six others a poor level and the remainder either adequate or good levels. Sleman came in at the top of the list for the level of accountability in its budget management. Factors supporting that ranking were its timely processing of six of its nine key budget documents and its use of an online process for advertising and processing public tenders, supported by a black list of companies ineligible to tender and a goods and services price structure revised annually. That said, Sleman was still not using a one stop shop approach to the provision of goods and services. The city of Pekalongan was ranked second highest for its accountability performance in budget management. Factors supporting that ranking were its timely processing of seven of its nine key budget documents and its use of an online process for advertising and processing public tenders, supported by a black list of companies ineligible to tender and a goods and services price structure revised annually. That said, Pekalongan was still not using a one stop shop approach to the provision of goods and services and it received a qualified opinion from the national Audit Board. City governments dominated the top half of the index of accountability in local government financial management, while kabupaten governments dominated the bottom half of the list. However, one cannot draw the conclusion from this that city governments were more accountable than kabupaten governments, but it indicates that relatively more assistance in the area of accountability should be provided to kabupaten governments. The same consideration emerges in a comparison of governments on Java and those outside Java, with the former dominating the top half of the list and the latter the bottom half. 36

37 kab/ city Research Report Category Very good level of accountability Good level of accountability Adequate level of accountability Poor level of accountability Score Graphic 4.3 Index of Performance in Accountability of Local Budget Managemen Kota Pekalongan Kota Surabaya Sumbawa Barat Kota Gorontalo Kab. Bone Padang Panjang Kota Semarang Kab. Pekalongan Kab. Cilacap Kab. Garut Aceh Besar Kota Palembang Bandar Lampung Kota Surakarta Kota Pare- Pare Kab. Wajo Kab. Bondowoso Lombok Barat Aceh Barat Lombok Tengah Dompu

38 Chapter V Research Report Performance in Promoting Equality in Local Budget Management Indonesia s regulatory framework stipulates that gender mainstreaming (GM) should occur in all aspects of national development including budgetary policies. Presidential Instruction (Inpres) No. 9/2002 provided the legal basis for GM in Indonesian law. Several other legal instruments enacted since then have reinforced that presidential decision, as follows: 1. Regulation of the Minister for Home Affairs No. 15/2008 on General Guidelines for the Implementation of Gender Mainstreaming in Regions. 2. Joint Circular Letter of the Ministers for Finance, Home Affairs and National Development Planning on representation of womens groups in the implementation of development planning at the village, sub-district (kecamatan) and kabupaten/city level. Two indicators were used to measure performance on gender equality in budget management. Firstly, the study looked at the extent to which institutional mechanisms for womens participation had been put in place by local governments. Second, it considered the degree to which GM had become part and parcel of local governments budget management processes. A. Special Mechanisms for Womens Participation Many local governments had still not set up special institutional mechanisms to encourage womens participation in government. Participation by women in development planning conferences (musrenbang) was dominated by womens groups involved in promoting family welfare (PKK) rather than individual health sector female workers (for example from integrated health service posts (posyandu)). More than 60% of governments studied included PKK groups and NGOs focusing on womens issues in musrenbang processes. By contrast fewer than 30% included representatives of posyandu staff and informal female groups. Only 40% involved female representatives of tertiary education institutions (which are important agents of gender mainstreaming) perhaps not surprisingly, given that not all areas have local centers of higher learning that include a womens affairs unit. The city of Semarang and the kabupaten of Bone had established mechanisms for womens participation and had enshrined them in local government regulations. B. Institutionalization of Gender Mainstreaming Most governments had not established institutional mechanisms required by law to implement gender mainstreaming (GM). Minister of Home Affairs Regulation No. 15/2008 on General Guidelines for Implementation of Gender Mainstreaming in Regions stipulates that, in order to hasten GM, regional governments should establish GM working groups (abbreviated to pokja PUG), 38

39 which includes the heads of all Research Report 39

40 No. of Kabupatens/Cities Number of kab/cities Research Report Graphic 5.1 Establishment of GM Mechanisms GM Bud.Team/GM Focal Pt/ GM Work Grp Not yet set up Already set up local government departments. One task of these GM working groups is to form a network of GM focal points which must be appointed in each local government department. Local governments are also required to form a Gender Responsive Budget team to integrate gender considerations into budget processes. But these regulations were observed in the breach by most governments studied. Although some areas had put in place required gender mainstreaming (GM) mechanisms, more than 60% had nonetheless failed to disaggregate data on education and more than 75% had not done so in regard to health. Researchers also found that, even where disaggregated data was available, it was not very often used in drafting education or health work plans. In fact, fewer than five governments made use of disaggregated data. The ill effects of not using disaggregated data were evident in both the health and education sectors. In the latter case, it affected policies on 9 years-of-obligatory-schooling and abolition of illiteracy (Graphic 5.2). Gender analyses were not used in formulating local government work programs most notably in the education and health sectors. Only around 10% of governments studied used gender analyses for health sector programs and, even more sadly, fewer than 5% did so for education programs. Graphic 5.2 Use of Disaggregated Data for Certain Programs 9 years at school illiteracy Infectious diseases Number of Kab/Cities Government included and used disaggregated data Government included but did not use disaggregated data Government neither included nor used disaggregated data Government did not possess disaggregated data In more than 70% of governments studied, the gender mainstreaming (GM) working groups that had been established did not formulate annual action plans and had insufficient money to fund their operations. This indicated Graphic 5.3: Departments that governments were not supportive of a high level of Headed by Women (%) performance by GM working groups In most governments studied, fewer than 20% of local government departmental heads were women. The data available for this study indicated that in 18 governments fewer than 10% of local government departments were under the charge of women; in 15 others between 10 and 19.9% were led by women; and in very few did the percentage of female departmental heads exceed 20% of all local departments (Graphic 5.3). Indeed two areas had not one single female None > 30% 20-30% % <10% % of Female Dept. Heads 2 40