The Efficiency Analysis of Government Expenditure on Education and Health in Sumatra: The DEA Approach

The purposes of this study are to measure the level of the relative efficiency of educational spending and healthcare spending in achieving Mean Years of Schooling (MYS) and life expectancy at regency and city in Sumatera. Data Envelopment Analysis (DEA) were employed for a data set of the spending of 154 local governments in 2019 with an output-oriented model. The approach used is a variable return to scale. In measuring efficiency, two input were used are (i) Government spending of the educational function and (ii) Government spending of the healthcare function, while two output were used are (i) Mean Years of Schooling (MYS) and (ii) life expectancy. The results show that, of the 154 local governments, 6 across ten regency and city in Sumatra, were relatively efficient. There are Gunungsitoli, Bukit Tinggi, Padang Panjang, Solok, Banda Aceh and West Nias.


INTRODUCTION
Local government spending is the use of budget to carry out government duties and functions aimed at improving the welfare of local communities. The level of welfare of the people of a region today is not only seen from economic factors. It also focuses on education and health levels (Chan & Karim, 2012). Thus, economic development today is not only oriented to the economic sector but has changed towards the direction of human resource quality development. In the Regulation of the Minister of Internal Affairs Number 59 of 2007, the affairs of education and health are mandatory https://ejournal.unsri.ac.id/index.php/jep/index DOI: 10.29259/jep.v19i2.15795 224 affairs of local governments. Indonesia is experiencing rapid expansion of the region, from 422 autonomous regions to 576 autonomous regions in 2019. Sumatra Island is the island that experienced the addition of the most autonomous regions, namely as many as 62 regencies and city, which initially there were 92 regencies and cities to 154 regencies and cities. While other islands only experience an increase of half of Sumatra (Rambe, 2020). Government spending in Sumatra is the second largest after Java, where Java is the center of development in Indonesia. The amount of government spending is not coupled with the level of quality of human life in Sumatra as seen from the number of life expectancy and average length of school as in the graph below (Brini & Jemmali, 2013). From Figure 1 can be known although the MYS on the island of Sumatra continues to increase and is above the national average, the Life Expectancy on the island of Sumatra is below the national average even below the island of Kalimantan which has a total expenditure smaller than the island of Sumatra. For that, it is interesting to learn how efficient the local government is in managing its spending. Then it is necessary to conduct an evaluation to find out which local government is relatively efficient in spending money to increase life expectancy and MYS in Sumatra.
Measuring efficiency itself is an important thing to do because efficiency is one of the principles of state financial management in Indonesia. The results of measuring the efficiency of an area will be useful to evaluate the area is good or not yet in managing its spending (Boetti et al., 2012). Therefore, it is interesting to take efficiency measurements in Sumatra to find out which local governments in Sumatra have spent money in a realistic efficient manner in the field of education and health (Kurnia, 2006;Pertiwi, 2007).  Figure 1 can be known although the MYS on the island of Sumatra continues to increase and is above the national average, the Life Expectancy on the island of Sumatra is below the national average even below the island of Kalimantan which has a total expenditure smaller than the island of Sumatra. For that, it is interesting to learn how efficient the local government is in managing its spending. Then it is necessary to conduct an evaluation to find out which local government is relatively efficient in spending money to increase AHH and RLS in Sumatra.
Government spending classified into 10 functions should be allocated to achieve the goals of each function. To find out the achievement of community welfare, it is appropriate to evaluate how the relative efficiency level of spending functions. By knowing how the relative efficiency of local government spending functions, the central government can provide input so that in the future the   (Dufrechou, 2016). Because not all output variable data in previous research can be used in this study because of data limitations. So, for the output variable for the field of education that will be used in this study is the average length of school. Because there is a 12-year study in Indonesia. The implication is that local governments should be able to allocate money from their budgets to school fees, and the central government to help through its operational funds (Javarov & Gunnarsson, 2008). While the health field output variable will be used life expectancy because of the limited willingness of data. The purpose of this study is to measure the relative efficiency level of government spending on education and health functions in each regency/city in Sumatra in 2019 using the Data Envelopment Analysis (DEA) approach. This research is also expected to be able to provide recommendations on the amount of life expectancy output and the average length of school that can be added so that regency/cities that are not relatively efficient can be relatively efficient. The empirical study used in this study is the concept of efficiency and government spending. Kawedar et al (2008) states that measuring efficiency can be seen from two sides, namely the cost incurred per unit of product (input to output) or the product produced per unit of resource (output to input). Efficiency is the ratio of output divided by inputs.
According to Mardiasmo et al. (2002), efficiency measurements are made using a comparison between the output produced against the input used. The greater the output than the input, the higher the level of efficiency. The process of operational activities can be said to be efficient if a particular product or work can be achieved with the use of resources and funds as low as possible (spending well). The efficiency ratio is not expressed in absolute form but in relative form. Bogetoft & Otto (2011) shows a mathematical relationship in explaining efficiency, where efficiency is the ratio of output per input. Efficiency measurement can be done with a ratio of 1 output to 1 input, or a multioutput to multi-input ratio. Government expenditure is the use of money in carrying out government functions to buy goods and services with the aim of fulfilling the welfare of the community. If the government has set a policy to buy goods and services, government spending reflects the costs that must be incurred to implement the policy (Mangkoesoebroto, 1999).
The constitution amends the 1945 Constitution article 31 paragraph 4 mandates the obligation of the government to allocate education costs of at least 20% of the state budget and APBD so that people can enjoy education services, developed countries can be seen from the high level of education of their people. The implication of development in the education sector is that human life will be more qualified". In relation to the economy, the higher the level of quality of life, the higher the growth rate and welfare of the nation. The higher the quality of life/investment of quality human resources will have implications also on the level of national economic growth (Afonso & Kazemi, 2016).
According to the Law of the Republic of Indonesia Number 36 of 2009 concerning Health, the government's health budget is allocated at least 5% (five percent) of the state budget beyond salary. As for the health budget of provincial and regency/city governments are allocated at least 10% (ten percent) of the regional revenue and spending budget beyond salary. Argues that health is the government's main concern as a public service organizer. Health sector spending is included in the classification of spending by function (Schultz,1961). Health function spending is regional spending issued to improve the quality of health and services such as the purchase of drugs, health facilities, and health buildings.
This research is compiled from the background, the reasons why this research is important to do, a review of the relevant literature, the methods and data used, then the results of data processing and discussion of the results of the study, ending with the closing word. The most common method used to measure efficiency is Data Envelopment Analysis (DEA). DEA is the use of https://ejournal.unsri.ac.id/index.php/jep/index DOI: 10.29259/jep.v19i2.15795 226 linear programming methods to form the highest frontiers in a data set (Coelli et al., 2005). To estimate the best production limits and evaluate the relative efficiency of different units. There are several assumptions that must be met in using the DEA (Bogetoft & Otto, 2011). The assumption is as follows: first, no inputs or outputs are wasted. Second, convexity. Third, -Return to scale (where it is constant, decreases, or increases back to scale). Fourth, there is addition or replication. In the DEA, the units measured are called Decision-Making Units (DMU). The efficiency resulting from DEA for efficient DMU ranges from 0-100 percent or 0-1. A DMU that has a score of less than 1 (on a scale of 0-1) is considered a relatively inefficient unit compared to other units (Coelli et al., 2005).

Data
This type of research is quantitative descriptive research. The data in this study is secondary data. The data used is input and output data in 154 regencies/cities in Sumatra in 2019 (BPS, 2020). The input data consists of 2 variables, namely Government spending of the educational function and Government spending of the healthcare function, both of data are accessed through the official website of the Ministry of Finance of the Republic of Indonesia (Porcelli, 2011). While the output data used is the Mean Years of Schooling (MYS) and life expectancy obtained from the Indonesian statistics publication book 2020 by the Indonesian Statistics.

Model
The analysis method used in this study is Data Envelopment Analysis (DEA) (Todaro, 2000). The selection of the use of DEA analysis is based on the consideration that DEA analysis is able to measure the relative efficiency of a Decision-Making Unit (DMU) under conditions of many inputs and outputs or so-called multi-input and multi-output (Bogetoft & Otto, 2011;Fidalgo et al., 2010). Relative efficiency measurement with DEA will use an output-oriented model based on Variable Return to Scale (VRS).
The analytical tool that will be used to analyze relative efficiency with the DEA Method in this study is to use DEAP (Data Envelopment Analysis Program).

Efficiency of Local Government
Based on Table 1 of 154 regencies/cities in Sumatra shows the results of processing data on the relative efficiency of the cost of spending on regional education and health functions using the DEA in 2019 (Suparmoko, 2013). The relative efficiency score between 0 until 1, the score of 1 means relatively efficient.  Table 1 shows that the condition of achieving the relative efficiency of education and health function spending there are 6 regencies/cities that reach relatively efficient from the total of 154 Sumatra (3.90% of the total). These 6 relatively efficient local governments are in 3 provinces namely Aceh, West Sumatra, and North Sumatra. The three provinces, most of the relatively efficient local governments are based in the province of West Sumatra (3 local governments are relatively efficient).

Increased Output for local government relative inefficiency in order to be relatively efficient
In firm-by-firm results in this study will be seen columns in original value, radial movement, and projected value. The following will be discussed further about the value of radial movement for each output, namely AHH and RLS, to be a recommendation for each regency/city that is inefficiency to increase the value of its output to achieve relative efficiency.