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Original research ANALYSIS OF PUBLIC EXPENDITURE EFFICIENCY IN THE EDUCATION AND HEALTH SECTORS IN EAST JAVA PROVINCE: A STOCHASTIC FRONTIER ANALYSIS APPROACHPages 35-46
Abstract
Human resource development through the education and health sectors requires optimal fiscal governance; however, an increase in budget allocation does not automatically guarantee linear outcome achievements. This study aims to measure and analyze the technical efficiency of public expenditures in education and health sectors across eight cities in East Java Province (Surabaya, Malang, Batu, Kediri, Blitar, Madiun, Mojokerto, and Pasuruan) during the 2014–2023 period. Utilizing a quantitative explanatory research design, this study applies the Stochastic Frontier Analysis (SFA) method with a Cobb-Douglas log-linear production function specification based on panel data (80 observations). The input variables include sector expenditure, GRDP per capita, total population (education control), and the number of medical personnel and health facilities (health control), with the Education Index and Life Expectancy serving as output variables. The results indicate a contrasting efficiency trend between the two sectors. Education spending efficiency showed a consistent upward trajectory from an average of 26.88% in 2014 to 82.61% in 2023, where population size significantly influenced the output, indicating economies of scale. Conversely, health spending efficiency fluctuated sharply and declined drastically during the COVID-19 pandemic (2020–2021), with economic capacity (GRDP per capita) and medical personnel availability acting as significant determinants. At the regional level, performance asymmetry occurred: Surabaya excelled in education efficiency but was less efficient in health, whereas Mojokerto consistently achieved high efficiency in both sectors. Policy implications highlight the urgency of shifting toward results-based budgeting rather than merely expanding nominal budget allocations.
Keywords:
Public Expenditure, Technical Efficiency, Education, Health, Stochastic Frontier Analysis (SFA).
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Orchidea Widi Puspita Yolandaa, 
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