International Journal of Science and Research (IJSR) ISSN (Online): 2319-7064 Index Copernicus Value (2015): 78.96 | Impact Factor (2015): 6.391 Volume 6 Issue 10, October 2017 www.ijsr.net Licensed Under Creative Commons Attribution CC BY Efficiency Analysis of Educational Fund Expenditure in Daerah Istimewa Yogyakarta (DIY) and East Java Provinces Anna Angela Sitinjak 1 , Esther Nababan 2 Department of Mathematics, University of Sumatera Utara, Indonesia Abstract: This study aims to measure the level of technical efficiency of education funding from direct expenditure allocation and school operational assistance fund in 2014-2016 in Daerah Istimewa Yogyakarta Province (DIY) and East Java Province that can be used for policy makers to evaluate the realization of the planned budget and program. Funds that are direct government spending on education are used such as for teacher salaries, education-related trainings, school building improvements and others, while school operational assistance fund is only given to poor students in economic so that students can go to school. This research uses Data Envelopment Analysis (DEA) method with assumption of Variable Return to Scale (VRS). The inputs used are government direct expenditure funds for education and school operational assistance fund. The outputs used are the population literacy data and the net enrollment rate. The results of this study indicate that the province of DIY is able to maintain efficiency in 2014-2016 although government spending on education funding and school operational assistance fund is less than East Java. East Java gets inefficiency. This can be influenced by quality of human resources. Keywords: Educational Funds, DEA, Efficiency 1. Introduction One of the Sustainable Development Goals (SDGs) 2015- 2030 is ensuring equity of quality education and improving learning opportunities for all people. This means that it is hoped that in 2030 there will be no more illiterate people. However especially for Indonesia, more than 5 million people are still illiterate. DIY province which is famous as one of the provinces of which one city is known as the city of education, also still have an illiterate population obtained from data of Education and sports offices of DIY Province. Table 1.1: Illiterate People in DIY Province Year (%) 2013 2014 2015 2016 7.14 8.03 7.14 7.14 In DIY Province, there are still people aged 15 and above who have not/ never attended school and who have been dropping out of school about 77% in 2016 obtained from the data of education and sports office. East Java is a province in Indonesia which has a population of illiteracy is still very high in 2015 about 9.67% for age 15 years old and above from Central Bureau of Statistics. Based on the data of the Ministry of Education and Culture, in 2015-2016 there are about 946,013 elementary school students who were unable to continue to the middle level. The data of 51,541 people of the number of students continuing their education to junior high school did not pass. There are 997,445 Indonesian children who are only certified elementary school in 2015 until 2016 (http://www.jawapos.com/read/2016/10/17/58205/angka- putus-sekolah-di-indonesia-masih-tinggi). .One of the factors causing it is poverty so that lower economical people prefer to work to earn money for daily needs rather than school. So it is not surprising that the number of people who do not go to school and drop out in Indonesia is still high. In 2010, the percentage of the population of 7-15 years who have no school about 2.51 percent and 6.04 percent for people who are no longer school (http://www.seocontoh.web.id/2016/01/data-jumlah- sensus-penduduk-update-2016.html). The problem of students continuing or not to the higher level is also a concern of all provincial education office. Education can help the population to develop the mindset and ability so as to reduce the poverty level. The efforts have been made by the government including allocating 20% of the state budget funds for education, but still there are people who are illiterate and drop out of school because of unable to pay for school needs. Therefore, it is necessary to measure the efficiency of education fund from the government, whether it should be reduced or increased. 2. Previous Studies There have been several previous studies that have evaluated the efficiency that is centered on the world of education. Bradley et al. (2001) calculated the technical efficiency of all secondary schools in the UK during the period 1993- 1998 and found that competition was the determining factor of school efficiency over time. Wolszczak-Derlacz, J. (2014) evaluated the relative efficiency of 500 higher education institutions (HEIs) in ten European and US countries between 2000 and 2010 with the DEA and found that the role of the university funding structure in HEI technical efficiency is different in Europe and in the U.S. Increased government funding is associated with an increase in inefficiency only in the case of European units, while the share of funds from tuition fees decreases the efficiency of American public institutions but relates to efficiency improvements in European universities. (Wolszczak- Derlacz, J. (2014), “An evaluation and explanation of (in) efficiency in higher education institutions in Europe and the Paper ID: ART20177064 DOI: 10.21275/ART20177064 110