The Local Governance Support Program (LGSP) in Indonesia was awarded by the U.S. Agency for International Development (USAID) to foster integrated planning and budgeting, citizen-focused service delivery, and participatory governance through local councils and civil society. As a subcontractor to RTI International, ICMA was part of a team that included Democracy International (DI), Computer Assisted Development Incorporated (CADI), and the Indonesian Media Law and Policy Center (IMLPC). Indonesia national government partners also included the National Development Planning Agency (BAPPENAS), the Ministry of Home Affairs, and the Ministry of Finance.

LGSP worked in nine provinces: Aceh, Banten, Central Java, East Java, North Sumatra, South Sulawesi, West Java, West Sumatra and the Bird's Head region of West Papua. It employed two primary strategies:

• Supporting local governments to help them become more democratic, more competent at the core task of governance, and more capable of supporting improved service delivery and management of financial resources
• Strengthening the capacity of local legislatures and civil society to perform their legitimate roles of legislative representation and oversight, citizen participation, and improved communications between government and citizens through a strengthened local media. 

To accomplish its objectives, LGSP provided assistance in five technical areas: strategic participatory planning, finance and budgeting, public service management, legislative strengthening, and civil society strengthening.

ICMA's Work in LGSP

ICMA's primary involvement in LGSP was in the area of finance and budgeting, providing training and other assistance to help local governments

• Develop performance-based budgets that reflect community priorities
• Create timely and accurate financial and performance reporting systems
• Improve the stewardship of public assets
• Transparently and responsibly meet financial obligations and build sustainable revenue streams
• Develop internal controls and financial audits
• Evaluate the implementation of performance-based budgeting in relation to the annual strategic plan
• Improve budget transparency and oversight and the performance of local agencies.

The program's work in these areas was supported by activities such as training in facilitation and participatory approaches; performance monitoring and evaluation; publications; and communications and outreach. For example, ICMA provided information and training on the entire fiscal accounting cycle from properly recording financial transactions to final fiscal year-end accountability. ICMA delivered training and workshops to develop awareness and knowledge, provided technical assistance to help municipalities put concepts into practice, and followed up with program analysis and evaluation to ensure that new practices were been implemented appropriately.

Other program activities included:

• Two study tours that brought Indonesian local government officials to Ahmedabad, India, and to the United States to visit cities in the Pittsburgh area and attend the ICMA conference there to share ideas with their counterparts
• Four regional conferences on good practices in finance and budgeting processes that covered all participating LGSP local governments, as well as officials from the Ministry of Home Affairs and the Ministry of Finance
• A study visit by Aceh districts to Boyolali and Kebumen to share experiences in implementing budgeting, accounting, and financial management, facilitated by ICMA-LGSP. 

LGSP continued the focus on performance-based budgeting that began with ICMA’s Building Institutions for Good Governance (BIGG) program and enriched it with the incorporation of performance measurement, performance reporting, and program evaluation. ICMA delivered an accounting package that included the new Government Accounting Standards of Indonesia, basic accounting, and accounting at the work unit level, as required by the Standards. ICMA helped local governments shift their accounting systems from single-entry to double-entry bookkeeping and helped them prepare financial reports at the work unit level. These reports were modified to include an asset management plan focused on the work unit level. ICMA also provided training and technical assistance to help municipalities with revenue management and administration, including the setting of realistic and reasonable taxes and fees.

Accomplishments

Accomplishments made possible by ICMA’s participation in the program included:

• Citizen participation in local budgeting through public hearings and other transparent mechanisms
• Implementation of public information and involvement plans including local governments and stakeholders in the budgeting process
• Broadened scope of finance and budgeting activities to include asset management and program evaluation
• Improved integration of planning, budgeting, and accounting processes in most provinces and districts
• Across-the-board improvement in average outcome measures for all LGSP provinces on the following, as assessed before and after the program: planning and budgeting, accounting and reporting, and asset management
• Improved commitment on the part of the various stakeholders involved in the local budget, including civil society and local councils, and interaction among stakeholders to find solutions to common problems.