Indonesia : Can Performance-Based School Grants Improve Learning?

The results in education for all children (REACH) trust fund at the World Bank funded an evaluation that assessed the early impact of a performance-based school grants program on student learning in Indonesia. This evaluation focused on two separate effects in the first two years of the new program: the effect of announcing the performance-based incentive to schools, and the effect of receiving the bonus for top performing schools. Announcing the performance incentive had different impacts on primary and junior secondary schools. Student test scores improved in all junior secondary schools, with the largest gains being made in schools that were already the highest performing. The effect of the program on learning was largely due to the change in incentives created by announcing the performance-based grants, rather than by the additional grant funding itself. Future programs can be improved by using other measures of school performance in addition to test scores, considering alternative designs of the formula to determine grant allocations, and allowing schools more flexibility in experimenting with ways to improve learning.