The influence of original local government revenues, general allocation funds and special allocation funds to local government expenditures
THE INFLUENCE OF ORIGINAL LOCAL GOVERNMENT REVENUES, GENERAL ALLOCATION FUNDS AND SPECIAL ALLOCATION
FUNDS TO LOCAL GOVERNMENT EXPENDITURES
Written by : Maharani Sinta Dewi
ID. 1111082100002
INTERNATIONAL PROGRAM ACCOUNTING DEPARTMENT
FACULTY OF ECONOMIC AND BUSINESS
SYARIF HIDAYATULLAH ISLAMIC STATE UNIVERSITY JAKARTA
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CURRICULUM VITAE
Personal Identities
Name : Maharani Sinta Dewi
Gender : Female
Place of Birth : Prabumulih Date of Birth : August 7th 1993
Address : Jl. Taman Murni No. 9 RT. 01 RW. 03 Kec.
Prabumulih Timur Kel. Gunung Ibul Barat, Sumatera Selatan. Indonesia
Phone/Mobile : 085286439900
E-mail Address : maharanisintadewi@ymail.com
Formal Education
College : UIN Syarif Hidayatullah Jakarta
Senior High School : SMAN 2 Prabumulih Junior High School : SMPN 8 Prabumulih Elementary School : SDN 50 Prabumulih
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ABSTRAK
The Influence of The Original Local Government Revenues, General Allocation Funds, and Special Allocation Funds to The Local Government
Expenditures
Penelitian ini bertujuan untuk mengetahui pengaruh Pendapatan Asli Daerah (PAD), Dana Alokasi Umum (DAU), dan Dana Alokasi Khusus (DAK) terhadap Belanja Pemerintah Daerah (BD) pada kabupaten/kota di Provinsi Sumatera Selatan. Penelitian ini menggunakan metode purposive sampling dengan krtiteria yang telah ditetapkan, maka diperoleh 10 kabupaten dan 4 kota yang dijadikan sebagai sampel penelitian pada tahun 2008-2013. Metode yang digunakan dalam penelitian ini adalah Kuantitatif dan Regresi berganda. Laporan keuangan kabupaten/kota Sumatera Selatan tahun 2008-2013 diunduh di laci.bps.go.id.
Hasil penelitian menunjukkan bahwa secara parsial, Pemerintah Asli Daerah (PAD) dan Dana Alokasi Khusus (DAK) memiliki pengaruh yang signifikan terhadap Belanja Pemerintah Daerah (BD) pada kabupaten/kota di Sumatera Selatan. Sementara Dana Alokasi Umum (DAU) tidak memiliki pengaruh signifikan terhadap Belanja Pemerintah Daerah (BD) pada kabupaten/kota di Provinsi Sumatera Selatan. Secara bersamaan, Pendapatan Asli Daerah (PAD), Dana Alokasi Umum (DAU) dan Dana Alokasi Khusus (DAK) berpengaruh signifikan terhadap Belanja Pemerintah Daerah (BD).
Kata Kunci: Pendapatan Asli Daerah (PAD), Dana Alokasi Umum (DAU), Dana Alokasi Khusus (DAK), dan Belanja Daerah (BD)
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ABSTRACT
The Influence of The Original Local Government Revenues, General Allocation Funds, and Special Allocation Funds to The Local Government
Expenditures
This research aimed to find out the influence of the Original Local Government Revenue (PAD), General Allocation Fund (DAU), and Special Allocation Fund (DAK) to the Local Govenment Expenditure (BD) on districts/cities in South Sumatera Province. According to the purposive sampling method with the sample criteria which is settled, obtained 10 districts and 4 cities which serve as the research sample from 2008-2013. Quantitative and Multiple Regressions method are used in this research.The financial statements on district/city of South Sumatra from 2008-2013 downloaded at laci.bps.go.id.
The results showed that partially, Original Local Government (PAD) and Special Allocation Fund (DAK) have influence significantly to the Local Government Expenditure (BD) on districts/cities in South Sumatera. While General Allocation Fund (DAU) had no influence significantly to the Local Governement Expenditure (BD) on districts/cities in South Sumatera Province. Silmutanneously, Original Local Governemnt Revenue (PAD), General Allocation Fund (DAU), Special Allocation Fund (DAK) influence significantly to the Local Government Expenditure (BD).
Key Words: Original Local Government Revenue (PAD), General Allocation Fund (DAU), Special Allocation Fund (DAK), and Local Government Expenditure (BD)
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FOREWORD
Assalamu’alaikum Wr.Wb
All praise to Allah SWT and Shalawat always gives to our Prophet Muhammad SAW.
With the strength, intelligence, patience, and passion from Allah SWT, I can to finish this my thesis as one of requirements to achieve bachelor degree. I believe there is an invisible hand (God) which have helped me going through this proces.
My special thank for my Mom, Diah Kusumawati, who has been helping and support to finish the thesis. You are my angels in human form. So, I want to make you always smile and proud of me at any situations. Thank you for taking care of me since I was a kid until today, preparing my meal every morning, remind me to pray, and everything I could not mention one by one. Because my gratitude for what you have done in my life would not enough to be written on a piece of paper, I love you more than you know. You are the best mother in this whole world, and thanks to allah because i have chance became your son.
My Beloved Father, Bambang Setiawan, who always give me lot of spirits and motivations when i felt hopeless to finish my thesis. You always belived that I can do everything on my own. Thank you for working so hard to support your family and to support me education.You are the first man that I want to say thanks in the world when I finish this thesis. I love you more than you know and thanks for everything.
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I believe I am nothing without each one of you who has helped me to finish this thesis. Thus, in this very special moment, let me say thanks to all of them who were helped me through the process of this thesis, including:
1. Prof. Dr. Abdul Hamid, MS as Dean of Economic Faculty of UIN Syarif Hidayatullah Jakarta. And as my thesis supervisor I. You are my mentor who has provided direction and guided me, shared your knowledge to me, and thank you for your time that you gave .So, I able to finish this thesis. 2. Hepi Prayudiawan,SE ,Ak ,MM as Head of International Program.
3. Soliyah Wulandari, SE, M.Sc as a my thesis supervisor II. Who has provided direction, guidance, and thank you for your time and your patience that you gave to me, so i can finish this thesis. But i’m sorry if i sometime annoying your time.
4. All Lecturers who have taught me patiently, may what they have given to me useful in future and all staff UIN Jakarta, special thanks to:
Mr. Bonyx “thanks you have taught me and given explanation about the thesis and also for provided any information”.
Mr. Chairul Anwar who had gave motivations and change my mindset
“do not ever say IMPOSSIBLE but say I’M POSSIBLE”.
Mr. Bambang Triwibagyo thanks for your experience and knowledge which you had shared to me.
Mr.Herni Ali, HT,. MM thanks for your directions, suggestions and help so I can finish my study at university.
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5. All my friends in Accounting International Program 6th Batch (2009), who helped me in finishing this thesis. Bunch of love for you guys Didit, Topik, Erwin ,Maya ,Siti, and Yusuf thanks for every support and motivation that you have gave to finish my thesis. And especially to Dian, Ilma and Depe thanks for every foolish things and jokes that you have done, and you made my day full of laugh. You guys are my inpiration. And Senior, Junior, and management class thanks all who couldn’t
mention one by one “Thanks for your pray”.
6. My family, Special thanks to my brother Rian and Dimas for moral and material supports my sister Titin. And also my special thanks to my boyfriend Lerry which always beside me. And alwyas give a support to
me. But I have two word support very remember from him “Spirit and Patient” to finished this thesis.
Authors realize that this thesis is still far from perfection, the suggestions and constructive criticism from all parties are expected to improve further. Finally, only Allah SWT will return all and writer hope this skripsi will be useful to all parties, especially for writers and readers in general, may Allah bless us. Amin.
Wassalammualaikum Wr.Wb.
Author
Jakarta, December 12nd 2014
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TABLE OF CONTENTS
Information Page
Curriculum Vitae ... vi
Abstract ... vii
Abstrak ... viii
Foreword ... ix
Table of Content ... xii
List of Tables ... xvi
List of Figures ... xvii
List of Appendix ... xviii
Chapter I INTRODUCTION A. Background Issues ... 1
B. Problem Formulation ... 7
C. Research Objectives ... 8
D. Research Benefits ... 8
Chapter II LITERATURE REVIEW A. Agency Theory ... 10
1. Definition of Local Government Expenditures (BD) ... 11
a. General Administration Expenditures ... 12
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c. Capital Expenditures ... 14
d. Transfer Expenditures ... 15
e. Unexpected Expenditures ... 15
2. Original Local Government Revenue (PAD) ... 16
a. Local Taxes ... 16
b. Local Retribution ... 17
c. Results of Regional Owned-Enterprises and Separated Local Wealth Management ... 18
d. Other Legal Revenue... 19
3. General Allocation Fund (DAU) ... 20
4. Special Allocation Fund (DAU)... 22
B. Previous Research ... 24
C. Theoritical Framework ... 29
D. Hypothesis ... 31
Chapter III RESEARCH METHODOLOGY A. Scope of Research ... 33
B. Population and Sample ... 33
C. Data Collection Method ... 34
D. Data Analyze Method ... 35
1. Descriptive Statistics ... 35
2. Classical Assumption ... 35
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b. Multicollinearity Test ... 37
c. Autocorrelation Test... 37
d. Heteroscedasticity Test ... 38
3. The Result of Multiple Regression Testing ... 39
a. Multiple Regression ... 39
b. Coefficient of Determination ... 39
4. Hypothesis Testing ... 40
a. Simultaneous Significance Test (F-Test) ... 40
b. Partial Significance Test (t-Test) ... 41
E. Operational Variable ... 41
1. Local Government Expenditure (BD) ... 41
2. Original Local Government Revenue (PAD) ... 43
3. General Allocation Fund (DAU) ... 44
4. Special Allocation Fund (DAK) ... 44
Chapter IV RESULT AND ANALYSIS A. General Description ... 45
B. Descriptive Statistics ... 46
1. Original Local Government Revenue (PAD) ... 47
2. General Allocation Funds (DAU) ... 48
3. Special Allocation Fund (DAK)... 49
4. Local Government Expenditures (BD) ... 49
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1. Classic Assumption Test ... 50
a. Normality Test ... 50
b. Multicollinearity Test ... 53
c. Autocorrelation Test... 54
d. Heterocedasticity Test ... 55
2. The Result of Multiple Regression Testing ... 56
a. Multiple Linear Regression ... 56
b. Coefficient of Determination ... 59
3. Hypothesis Testing ... 61
a. Simultaneous Significant Test (F-Test) ... 61
b. Significant Partial Test (t-Test) ... 62
c. Hypothesis test result ... 64
Chapter V CONCLUSIONS AND RECOMMENDATIONS A. Conclusion ... 65
B. Recomendation ... 66
REFERENCE ... 68
APPENDIX I ... 72
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LIST OF TABLE
No Descriptions Page
2.1 Previous Research Table ... 27
4.1 Name of Districts/Cities in South Sumatera ... 45
4.2 Sampling Criteria ... 46
4.3 Descriptive Statistics Test ... 47
4.4 Kolmogorov-Smirnov Test ... 51
4.5 Multicollinearity Test ... 54
4.6 Autocorrelation Test ... 55
4.7 Multiple Regression ... 57
4.8 Criteria of Correlation Coefficient ... 59
4.9 Model Summary ... 60
4.10 Simultaneous Significant Test (F-Test) ... 61
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LIST OF FIGURE
No Descriptions Page
2.1 Theoritical Framework ... 31
4.1 Normal P-Plot Graph ... 52
4.2 Histogram Graph ... 53
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LIST OF APPENDIXES
NO DESCRIPTIONS PAGE
Appendix 1 Research Data ... 77 Appendix 2 Output SPSS That Used for the Result of the Research ... 81
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CHAPTER I INTRODUCTION
A. Background Issues
In January 2001, Indonesia began a new round of nation organizing system on all government levels and is known as the regional autonomy. Nearly all the authorities of the Central Government devolved on the area, except for five the field; Foreign policy, Security, Defense, Justice, Finance and Religion. Since then the budget of the Local Government from year to year had shown significant improvements, both in terms of coverage of the types of funds allocated, as well as the quantity of allocation. Local Government Expenditures are prioritized to execute government affairs, which consist of the mandatory affairs and the option affairs that are set on the basis statutory.
The Reformation brought many changes in the life of nation and the state, one of the many reforms that led to a change is the reform of Central Government relations with Local Governments better known as the "Regional Autonomy." The
term “Regional Autonomy” is not new, it is already mentioned within the laws of
the Constitution of 1945. The current Regional Autonomy associated with UU No. 32 of 2004, which concerns on local governments and has been revised in UU No. 22 of 1999 and UU No. 33 of 2004 about of Local Government and Fiscal Balance between the Central Government and Local Government. The enforcement of both statuary Laws made an impact on changing patterns of
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regional accountability over funds allocated. The pattern in use is the Horizontal Accountability pattern through the Parliament (DPR).
Through the Regional Autonomy Act, the authority of regional autonomy has been set up and is administrating the interests of the local communities according to their own initiatives based on the aspirations of the community. Regional Autonomy demanded local governments to be able to providing excellent service as well as good news to the community, one of the forms the service is to provide information that is transparent and accountable. The concept of Regional Autonomy requires.
1) Community empowerment
2) Democratization in the sense of giving responsibility to all communities 3) Opportunities To accelerate the equally society welfare
4) The improvement quality of bureaucracy service. 5) Improved quality of supervision by the legislature.
Public sector reforms that accompanied the demands of democratization become a global phenomenon, including in Indonesia. The demands of democratization led to transparency and accountability aspect. Both aspects are important parts in Governance, especially in the field of financial management of the State or regions. The economy observers, political observers, investors and the community members begin to pay attention to any policies in financial management.
This current era of fiscal decentralization, expected an increase in service in various sectors particularly the public sector, with an increase in services in the
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public sector can increase the attractiveness for investors to invest in the area. Therefore, the shift in the composition of expenditure is the logical effort conducted local government in order to improve the level of public trust can be done by increasing capital investment in fixed assets, namely equipment, buildings, infrastructure and other fixed assets. With the increase in capital expenditure is expected to increase the public service as a result of capital expenditure is increasing fixed asset areas is a prerequisite in providing public services by local government.
Overcome the problem of fiscal imbalance and the need for large areas of funding, the government give equalization fund and one of the most component these funds provide the greatest contribution is the General Allocation Fund (DAU). Fund balance is the funding coming from the state budget consists of revenue-sharing (DBH), the General Allocation Fund (DAU), the Special Allocation Fund (DAK). Fund balance in addition intended to assist local authorities in the fund, also aims to reduce the gap of local government funding. Within a few years running, the proportion of the general allocation of funds to regions still the highest compared with other regions including the receipt of other areas including the Original Local Government Revenue (PAD). This shows the high dependence of local governments on central government funding supply.
There is one news that includes about General Allocation Fund (DAU) and Special Allocation Funds (DAK). Aman (2014) explained the 2013 budget, tax revenue-sharing target of Rp363 billion, Rp386 billion realized for more. Non-tax revenue target of Rp478 billion, Rp439 billion more realized over the target while
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DAU 678 billion realized over 100 percent, DAK allocated Rp46 billion for the nine fields with the realization more Rp45 billion, will be used in 2014 in accordance with the applicable technical guidelines. While for 2014, the target funds for the overall results of Rp753 billion, but until last March has not been realized. Then in 2014, DAK allocated Rp59 billion more for eight areas: elementary-high school education, infrastructure roads, irrigation infrastructure, sanitation infrastructure, infrastructure and infrastructure regency, the field of family planning, forestry and trade fields. The central government in order to prioritize the Muara Enim regency in revenue-sharing provision and DAK propagated field obtained. So the Muara Enim Regency could grow more rapidly and can ease the burden of development costs through the budget, especially in realizing the Muara Enim SMAS. (Platmerah.co.id)
The Original Local Government Revenues (PAD) each region are different. For regions, which have advanced in the field of industry and have natural resources it is likely to have greater Original Local Government Revenues (PAD) than the other regions. Because of that an inequality of the Original Local Government Revenues might occur. On one side, there are very rich regions with a high PAD and on the other side, there are regions that are lagging behind with a low PAD.
Each area has the same ability not to fund the operations of each of its region, which creates a fiscal imbalance between regions. To overcome these imbalances, the central government transferred funds balance for each region. One of the fund balance of the General Allocation Fund (DAU), General Allocation
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Fund is a fund from the central government which is taken from the state budget that is allocated for the purpose of financial equalization among regions to finance the expenditure needs of local governments in the implementation of decentralization. In connection with the financial balance between central and local government, it is a consequence of the transfer of power from central government to local governments. Distribution of funds to the region through the results tend to cause imbalance between the regions, the role of the General Allocation Fund (DAU) lies in its ability to create equity based on consideration of the potential fiscal and needs of each specified. In fact, the General Allocation Fund (DAU) still to be excellent compared with Original Local Government (PAD) and regional financing because the loan can not be relied upon. PAD when it should be used to build a lot of areas in order to invest in the area, so revenue can be used to finance regional and local spending. Independence for the region still has not been fully implemented due to funding from the central government.
The transfer of funds realized in the form of fund balance that is the Special Allocation Fund (DAK). Based on UU No. 33 In 2004, the Special Allocation Fund (DAK) is a fund of the state budget allocated to certain areas with the purpose to help fund special activities of regional affairs and in accordance with national priorities. Utilization Special Allocation Fund (DAK) investment activities directed at the development, procurement, improvement, and repair of physical infrastructure with long economic life, including the provision of physical infrastructure support, and does not include capital investments. With the Special Allocation Fund (DAK) is expected to influence the Local
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Governemnt Expenditure (BD), because Special Allocation Fund (DAK) tend to increase the fixed assets owned by the government to improve public services.
Previous researchers have analyzed the influence of the General Allocation Funds (DAU), and Original Local Government Revenues (PAD) to the Local Government Expenditures. According to Mulyadi et al (2010) the result showed Original Local Government Revenue (PAD) and General Allocation Fund (DAU) has a influence significantly to the Local Government Expenditure (BD) in the Bengkulu province.
Sorongan (2013), analyzing the relationship of Original Local Government Revenue (PAD) and General Allocation Fund (DAU) to local expenditure in South Minahasa. Research results of Original Local Government Revenue (PAD) and General Allocation Fund (DAU) given less contribute to Local Government Expenditure (BD).
Adam, et al (2013) the influence Original Local Government does not have influence on Direct expenditure Allocation in Southeast Sulawesi. It is defined that Original Local Government Revenue (PAD) has not contributed on Direct Expenditure in Southeast Sulawesi. And General Allocation Fund (DAU) shows influence on direct expenditure allocation in Southeast Sulawesi.
Almost all research conducted a study that examined the influence of General Allocation Fund (DAU) and Original Local Government Revenue (PAD) to the Local Government Expenditure area (BD). Research Adam, et al (2013) using an independent variable Original Local Government Revenue (PAD) and General Allocation Fund (DAU), and the period of this 2007 - 2011 in Southeast
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Sulawesi. There are some differences in this study compared with previous studies, in this study the author added the independent variable is the Special Allocation Fund (DAK). This research is the development of research Adam, et al.(2013). Author used the study period 2008-2013 in 15 districts/cities South Sumatera, using data for the last six years of preparation of research is expected to provide information relevant to the current condition of the Local Government Expenditure area. Based on the explanation above, the author is interested in conducting research on:
“The Influence Of Original Local Government Revenues, General Allocation Funds And Special Allocation Funds To Local Government Expenditures”
B. Problem Formulation
Based on the background described above, the subject is considered to find answers on the following questions:
1. Does the Original Local Government (PAD) influence on the Local Government Expenditure (BD) ?
2. Does the General Allocation Fund (DAU) influence on the Local Government Expenditure (BD) ?
3. Does the Special Allocation Fund (DAK) influence on the Local Government Expenditure (BD)?
4. Do The Original Local Government (PAD), General Allocation Fund (DAU), and Special Allocation Fund (DAK) simultaneously influence on the Local Government Expenditure (BD) ?
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The purposes of this research are:
1. To analyze the influence of Original Local Government Revenues (PAD) to the Local Government Expenditures (BD).
2. To analyze the influence of General Allocation Fund (DAU) to the Local Government Expenditures (BD).
3. To analyze the influence of Special Allocaliton Fund (DAK) to the Local Government Expenditures (BD).
4. To analyze the simultaneously influence of Original Local Government Revenues (PAD), General Allocation Fund (DAU), and Special Allocation Fund (DAK) to the Local Government Expenditures (BD).
D. Research Benefits
This research is expected to be beneficial for: 1. Benefit for Local Government
Provide advises to the Central Government and the Regions in terms of future policy formulation.
2. Benefit for Researchers
a. Add science and insights from the information gathered, as well as add to the experience of researchers in the field of research.
b. Increase knowledge and understanding of the influence of the Original Local Government Revenues (PAD), General Allocation Funds (DAU)
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and Special Allocation Fund (DAK) towards the Local Government Expenditures (BD).
3. Benefit for The World of Education.
a. Provide input for academics to develop science in the Government Accounting field, in particular, on the influence of Original Local Government Revenues (PAD), the General Allocation Funds (DAU) and Special Allocation Fund (DAK) to Local Government Expenditures (BD).
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CHAPTER II LITERATURE REVIEW
A. Agency Theory
The elements contained in the Local Government Revenue and Expenditure Budgets (APBD) are the income and the expenditures, where the income in question is the source of acceptance for the area known by the Original Local Government Revenues (PAD). While expenditures are equal to the expenditures incurred by local governments in carrying out the tasks and functions. In accordance with Act No. 32 of 2004 concerning Local Governments, local governments have the right to set up and take care of their own Government Affairs according to the principles of the regional autonomy of the region, geared to accelerate the achievement of well-being communities through improving the services, empowerment and participation of all communities, as well as the increase the competitiveness of the area having regard to the principles of democracy, equity, justice and the specificities of an area in a unitary state system of the Republic of Indonesia.
In order to fulfill the rights and obligations, the Government elaborates a plan to achieve the purpose, which is aspired to. This plan is used as a guide in each step of the execution of the duties of the State. (Ghozali, 1997:37).
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1. Local Government Expenditures (BD)
The definition of expenditures by the UU No. 24 of 2005 is as follows:
“Expenditure is all expenditures from the account of the State / Regional equity
funds reduce smoothly in the corresponding period of the fiscal year that will not
be earned back by the government payment.”
Another definition of expenditure is as described in the Regulation of the Minister of Home Affairs Decree.UU No. 59 of 2007 as follows:
"Expenditures are the obligation of the local government which is recognized as a deduction from net worth."
Government UU No. 24 of 2005 states that the capital expenditure is the expenditure budget for the acquisition of fixed assets and other assets that benefit more than one accounting period. Both of these definitions make it clear that the deal will reduce the equity fund expenditures of local governments. Both the rules, which arrange the expenditures, classify expenditures by different classifications. The difference is simply because there is anything else you want covered by the Regulation of the Minister of Home Affairs Decree. UU No.59 of 2007. As it is defined by the Minister of Home Affairs Decree UU No. 59 in 2007 as a local financial management guideline, which includes the planning, budgeting, administration, accounting and accountability. As the required budgetary instrument the information control is indicated, which is considered the information associated with the concept of performance-based budgeting.
According to UU No 58 article 26 of 2005 Expenditure matters concerning the implementation of priority referred to protect and improving the
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quality of life of the community in an effort to meet local obligations are realized in the form of increased basic services, education, health, social facilities and public facilities and develop an appropriate social security system.
The classification of expenditure by business shall include: education, health, public works, housing, spatial planning, transport, environment, land, population and civil, women's empowerment, family planning and family welfare, social, labor, cooperative and small and medium enterprises, investment, culture, youth and sports, national unity and domestic politics, public administration, employment, community development and rural, statistics, records and communications and informatics. The classification of expenditures by business choices includes: agriculture, forestry, energy and mineral resources, tourism, marine and fisheries, trade, industry, and transmigration.
Expenditures in handling government affairs a particular part or midwife can be implemented jointly by the government and local governments established by the statutory provisions set out in the form of programs and activities that classified according to obligatory and matters of choice.
In general, expenditures in the budget are grouped into five groups, namely:
a. General administration expenditure
Government expenditure is all that is not directly related to the activity or public service. General administration expenditure group consists of four types, namely:
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1) Personnel expenditures are expenditures for the Local Government/Personnel (salaries, honorarium, and overtime) that is not directly related to the activities providing services to citizens.
2) Expenditures for goods are local government expenditures on goods and services not directly related to public services.
3) Expenditures for travel are expenditures on travel expenses and council employees who are not directly related to the public service.
4) Maintenance expenditures are expenditures for the maintenance of the Local Government of goods that are not directly related to the public service.
b. Operating Expenditures
Maintenance of public infrastructure is an all expenses associated with the Local Government or public service activities. Expenditure groups include:
1) Personnel expenditure (Operation and Maintenance Expenditure Group facilities and public infrastructure) are expenditures for the Local Government/Personal the effect directly to a specific activity or in other words, an expenditure that is variable.
2) Goods expenditures (Group Operations and
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government expenditure for the provision of goods and services directly related to the public service.
3) Travel expenditures (Group Operations and
Maintenance Expenditures infrastructure public) are local government expenditures for employee travel expenses directly related to the public service.
4) Maintenance expenditures (Operation and Maintenance Expenditure Group facilities and public infrastructure) are government expenditures for the maintenance of assets from current areas that have a direct impact on the public service.
c. Capital Expenditures
Government Capital Expenditures refer to government spending on investment goods. This means spending on things that last for a certain period of time. This may include investment in hospitals, schools, equipment (furniture, IT-facilities, archive facilities) and roads. Capital Expenditures are divided into:
1) Public expenditures, these are expenditures those benefits can be enjoyed directly by the general public.
2) Apparatus expenditures, namely expenditures directly benefit not enjoyed by the public, but it is felt directly by the apparatus.
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d. Transfer expenditures
Transfer Expenditures are the expenditures for the transfer of money from the government to third parties without expecting reward or gain refunds of the money transferred. The group consists of expenditures for:
1) Installment of loans. 2) Grants.
3) Reserve funds.
e. Unexpected Expenditures
Unexpected expenditures are the expenses incurred by local governments to finance the activities of unexpected and extraordinary events. According to Nurlan (2008) states that unexpected expenditures are expenditures for activities are unusual or not expected to recur like natural disasters and social disasters unforeseen, including the refunds of excess revenues from previous years that have been closed.
Classification of expenditures by function for alignment and integration of financial management consists of:
1) Public Service; 2) Order and Peace; 3) The Economy; 4) The Environment;
5) Housing and Public facilities; 6) Health;
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7) Tourism and culture; 8) Education, and 9) Social protects.
2. Original Local Government Revenues (PAD)
According Suparmoko (2012: 159) is a Original Local Government Revenue (PAD) of local government revenue sourced from the local taxes, levies results, and the results were separated areas of wealth management, as well as other legitimate revenue.
Definition of original local government revenues (PAD) according to UU No. 28 of 2009 the financial resources of the excavated area of the region concerned region consisting of the results of local taxes, levies results, the results were separated areas of wealth management and other legitimate revenue.
In the UU No.13 of 2006 the Ministry of Home Affairs explains the revenues will be divided according to the type of income :
a. Local Taxes
The presence of UU No. 18 of 1997 on local taxes and levies is the legal basis for local government passed a law in one of the sources of financing the implementation of the Government of the area. Prior to the enactment of UU No. 18 of 1997 changes, provincial taxes include three types of taxes, namely:
1) Motor vehicle tax
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3) Motor vehicle fuel tax
While tax district / city consists of : 1) Hotel and restaurant tax 2) Tax street lighting 3) Tax billboard 4) Tax entertainment
5) Tax collection and management of excavated material class C Tax utilization of ground water and surface water Furthermore, regulations governing the new order is the post-tax UU No. 34 of 2000 on amendments to the UU No. 18 of 1997 on regional taxes and levies. Taxes and levies are the sources of revenue.
b. Local Retribution
Collection of retribution paid directly by those who enjoy the service, and are usually intended to cover all the costs or the ministry. Retribution according to UU No. 28 of 2009 is taxation as a payment for certain services or special permits provided and/or administered by the local government for Personal or Entities. The amount of retribution should be (more or less) equal to the value of the services provided. In the new budget structure with performance approach, the kind of income that comes from local tax and
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retribution areas under UU No. 34 of 2000 on the Amendment Of UU No. 18 of 1997, Retribution broken down into :
Retribution is broken down into: 1) General Retribution
That is, a levy on services provided or provided by local governments for general interest and can be enjoyed by private persons or entities.
2) Business Retribution
i.e.: fees for services provided by the government to adhere to commercial principles because basically provided by the private sector.
c. Income of Local Government Corporate Management of Regional Government Separated Wealth
As UU No. 34 of 2004, the kind of results that separated the area of wealth management can be broken down by revenue object that covers the return on capital investment in locally-owned companies/enterprises. Part return on capital investment in state-owned enterprises/state and the return on equity investment in privately-owned company or a group of business people.
1) Regional Company
In an effort to explore the sources of revenue can be done in various ways, as long as not contrary to the Laws and
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regulations. One source of revenue is very important and needs special attention is the company area.
2) The company is a unit of production area that is: (a) Providing services
(b) Conducting general use (c) Cultivate revenue
3) The regional company's goal to participate in implementing regional development, in particular, and the development needs of the people with industrialization and peace and tranquility of working towards a just and prosperous society.
4) Regional company engaged in the field according to household affairs under the Laws governing local government subjects. 5) Branches of production which are important for the region and
to lord lives of many people in the area, the capital is entirely separated regional assets.
d. Other Legal Revenues
Other types of PAD (Revenue) are constituted under UU No. 33 of 2004. Other legal revenues are revenues gained from outside taxes, retribution, and income, which have been described above. Other legal revenues include:
1) The sale of regional assets that are not separated by cash or installment / mortgage, current account.
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2) Interest income.
3) Receipt of compensation claims area. 4) Receipt of commissions.
5) Discounts or other forms achieved as a result of sales or procurement of goods and services by a region.
6) Revenue gains from the differences in the exchange rate against foreign currencies.
3. General Allocation Funds (DAU)
According to the UU No.33 of 2004, the General Allocation Funds are sourced from the State Revenues and Expenditure Budget (APBN) to be allocated for local government in balancing the financial capacities among regions and to fulfill local government needs in terms of decentralization.
According to Aziz (2014), General Allocation Fund (DAU) is a fund that is derived from the receipt of State Budget (budget) allocated to the region in the form of a block grant utilization is left entirely to the area. General Allocation Fund (DAU) is "Block Grant" which means that its use be submitted to the area in accordance with the priorities and needs of the region to improve services to the community in the implementation of regional autonomy. ( http://abdoel-azys.blogspot.com)
General Allocation of Fund (DAU) for a new autonomous region allocated after the formation of legislation legalized. Counting DAU for new autonomous regions performed as data is available, the calculation is done by
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dividing the DAU porposional with the parent. This calculation uses the data of population, land area, and personnel expenses, Djalil (2014: 143).
Scale of national general allocation based on the mandate of UU No. 33 of 2004 set at least 26% of income in the country (PDN). Income in the country (PDN) is the net revenue derived from the tax and non-tax revenues after deducting shared out to the area (DBH). Proportion for provincial DAU is set at 10% and for the district / city is set 90% of the amount DAU nationally.
In UU No.32 of 2004 mentions that for the implementation of the local government authority, the central government will transfer the Balanced Budget consisting of the General Allocation Funds (DAU), Special Allocation Funds (DAK), and Tax Share (DBH) consisting of taxes and income from natural resources. Besides the Balanced Budget (DAU, DAK.etc), Local Governments have their own sources of funding in the form of Original Local Government Revenues (PAD) and Local Government Financing.
According to the UU No.33 of 2004 about Central Balanced Budget and local government stated that DAU in a Region (Provincial, District and City) is determined by using a fiscal gap approach, which is indicated by local needs and the potential of a region (Natural and Human Resources). The General Allocation Funds (DAU) are used to cover the fiscal gap. Fiscal gap happened when the Local Government Expenditures exceed the Original Local Government Revenues (PAD).
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4. Special Allocation Fund (DAK)
According to Djalil (2014: 152) Spesial Allocation Fund (DAK) is intended to assist specific activities in certain areas which is a regional affairs and in accordance with national priorities, specifically to fund infrastructure and basic public services that have not reached a certain standard or to accelerate development areas.
Based on UU No. 33 of 2004, the Special Allocation Fund is a fund of the state budget allocated to certain areas with the purpose to help fund special activities of regional affairs and in accordance with national priorities. In www.depkeu.djpk.go.id website DAK policy aims:
1) Priority areas to assist with the financial capacity below the national average, in order to fund activities rovision of physical infrastructure as basic public services which have a regional affairs.
2) Supporting the accelerated development of infrastructure in coastal areas and small islands, border areas with other countries, backward / remote, areas prone to flooding / landslides, as well as including the category of food security and tourism area.
3) Encouraging productivity improvements and expansion of employment opportunities, especially in rural economic diversification, through specific activities in agriculture, marine and fisheries, as well as infrastructure.
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4) Improving access of the poor to basic services and basic infrastructure through specific activities in the field of education, health, and infrastructure.
5) Maintain and improve the quality of life, and prevent environmental damage, and reduce disaster risk through specific activities in the field of environment, accelerate the provision and increase the coverage and reliability of basic infrastructure services in a single integrated system through specific activities in the field of infrastructure .
6) Support the provision of infrastructure in the affected area expansion districts, cities, and provinces through specific activities in the field of governance infrastructure.
7) Improve the integration and synchronization of activities funded from DAK with activities funded from the budget of the Ministry / Agency and activities funded from the budget.
8) Shifting gradual deconcentration and assistance funds are used to fund activities that have become regional affairs to DAK. Funds were diverted from the budget of Ministry of Public Works, the Ministry of National Education and the Ministry of Health.
Utilization DAK investment activities directed at the development, procurement, improvement, and repair of physical infrastructure with long economic life, including the provision of supporting infrastructure. With the DAK
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allocation is expected to affect the allocation of capital expenditures, as DAK tend to increase the fixed assets owned by the government to improve public services.
B. Previous Research
1. The Influence of Original Local Government Revenue (PAD) to the Local Government Expenditure
The influence Study on the influence of Original Local Government Revenue (PAD) in Local Government Expenditure has been done. Rivai (2013) showed the Original Local Government Revenue (PAD) influence an increasing number of Local Government Expenditure (BD) in Gorontalo province. Mulyadi et al (2010) the result showed Original Local Government Revenue influence significant to Local Government Expenditure (BD) in Bengkulu province.
Djalil (2014: 286) argues with this requires the Original Local Government Revenue (PAD) to optimize the resources area in order to increase revenue, especially revenue and local tax levies. This indicates a strong indication, that if the PAD an area increases, the region's ability to perform Local Government Expenditure (BD) will also experience an increase.
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2. The Influence of General Allocation Fund (DAU) to the Local Government Expenditure
According to Adam,et al (2013) the General Allocation Fund (DAU) shows influence on direct expenditure allocation in Southeast Sulawesi. And Mulyadi et al (2010) the result showed General Allocation Fund (DAU) influence significant to the Local Government Expenditure in Bengkulu province. Rinzani et al (2011) the result showed General Allocation Fund influence to the Local Government Expenditure in South Kalimantan.
Djalil (2014: 145) suggests the lower the life expectancy index, education index, and a decent standard of living index, the declining DAU obtained an area. Given the current fiscal needs to perform a public service in local government getting bigger, then the local government should optimize local revenue sources as embodiments of fiscal independence. Because if the General Allocation Fund (DAU) has decreased, it can cause a decrease in Local Government Expenditure (BD). This indicates that the local government expenditure behavior primarily of Local Government Expenditure (BD) influenced by the DAU.
3. The Influence of Special Allocation Fund (DAK) to the Local Government Expenditure
Research conducted by Rivai (2013) showed that the Special Allocation Fund (DAK) influence an increasing number of Local
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Governemnt Expenditure (BD) in Gorontalo province. And according to Rizani et al (2013), the result showed Special Allocation Fund significantly influence to the Local Government Expenditure on districts/cities in South Kalimantan. And according to Siregar (2013) the result showed Special Allocation Fund influence significantly on the Local Government Expenditure (BD) in Jambi Province.
Fund balance is the embodiment of a financial relationship between central and local government. One of the fund balance is the Special Allocation Fund, DAK is sourced from the state budget funds allocated to local governments to finance specific activities is a matter of local and national priorities. DAK goal to reduce the burden of the cost of specific activities that must be borne by the local government. Utilization DAK investment activities directed to the development, procurement, improvement, improvement of physical infrastructure of public services with long economic lives. With the use of DAK should be directed to these activities are expected to improve public service realized in Local Government Expenditure (BD). This indicates that the local government expenditure behavior primarily of Local Government Expenditure (BD) influenced by the DAK.
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Table 2.1
Previous Research Table
No. Author
(Year) Thesis Title Variables Conclusions
1 Adam,
Umar & Sosilo (2013)
Influence of Original Local Government Revenue (PAD) and General Allocation Fund (DAU) on Local Government Expenditure in districts/cities of Southeast Sulawesi 1. General Allocation Funds (DAU)
2. Original Local Government Revenues (PAD) 3. Local government expenditure Budget The influence Original Local Government does not have influence on Direct expenditure Allocation in
Southeast Sulawesi. It is defined that
Original Local
Government Revenue (PAD) has not
contributed on Direct Expenditure in Southeast Sulawesi. And General
Allocation Fund (DAU) shows influence on direct expenditure allocation in Southeast Sulawesi. 2 Sorongan
(2013)
The influence of General Allocation Funds (DAU) and Original Local Government
Revenues (PAD) On Local government expenditure Budget in South Minahasa
1. General
Allocation Funds (DAU)
2. Original Local Government Revenues (PAD) 3. Local government expenditure Budget
The results show that the relationship of the DAU and Original Local Government Revenue has no influence to the local government
expenditures. Besides Local Taxes and Levies asa major source of revenue corresponding analysis of the relationship of the Regional Tax on Expenditure PAD is very strong shows local taxes provide relationship to the PAD inregional local
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No. Author (Year)
Thesis Title Variables Conclusions
local government expenditure activities 3 Rivai
(2013)
The influence of General Allocation Funds (DAU), Special Allocation Fund (DAK) and Original Local Government
Revenues (PAD) On Local government expenditure Budget in Gorontalo Province 1. General Allocation Funds (DAU) 2. Special Allocation Fund (DAK)
3. Original Local Government Revenues (PAD) 4. Local government expenditure Budget Original Local Government Revenue (PAD), General Allocation Fund (DAU) and Special Allocation Fund (DAK) influence an increasing number of Local Governemnt Expenditure in Gorontalo province. Simultaneously Original Local Government Revenue, General Allocation Fund and Special Allocation Fund had a positive influence toward the Capital Expenditure Allocation.
4 Mulyadi, Alfansi and Benardin (2010)
The analysis of effect General allocation Fund and Original Local Government Revenue to Local Government Expenditure in Bengkulu
1. General
Allocation Fund 2. Original Local
Government Revenue 3. Local Governemnt Expenditure The General
Allocation Fund and Original Local
Government Revenue influce signicicant to Local Government Expenditure in Bengkulu.
5 Rizani, Fatiah, Rasidah, Rawintan, and Utami (2011)
The influence of Economic Growth, Original Local Government Revenue, General allocation Fund, Special allocation Fund in South
1. Economic Growth 2. Original Local
Government Revenue 3. General Allocation Fund Partialy Economic Growth, Original Local Government Revenue, General Allocation Fund, and Special Allocation Fund significantly
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C. Theoritical Framework
The Original Local Government Revenues (PAD) is local revenues consisting of the local taxes, Retribution, earnings from Regional Owned Enterprises (BUMD) and other legitimate incomes. In this research try to analyze the effect of The Original Local Government Revenues (PAD) to local government expenditure (BD) in South Sumatera province, whether the same to
No. Author (Year)
Thesis Title Variables Conclusions
Kalimantan Province 4. Special Allocation Fund 5. Local Government Expenditure
influence to Local Government Expenditure on districts/cities in South Kalimantan
Province 6 Siregar
(2103)
The influence of Original Local Government Revenue, General Allocation Fund and Special Allocation Fund to Local Government Expenditure in Jambi province
1. Original Local Government Revenue 2. General Allocation Fund 3. Special Allocation Fund 4. Local Government Expenditure Original Local Governement Revenue, General Allocation Fund and Special Allocation Fund significantly and simultaneously
influence on the Local Government
Expenditure in Jambi Province. And
partially the variable of Original Local Government revenue , general allocation fund, special allocation fund influence
Significantly to local governemnt
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the results of previous studies which can conclude that the larger PAD increases the local government expenditure activities.
The General Allocation Funds (DAU) is the funding coming from the state budget (APBN) allocated for the purpose of inter-regional fiscal capacity equalization to finance the Expenditures in the context of decentralization. In this research try to analyze the influence of The General Allocation Funds (DAU) to local government expenditure (BD) in South Sumatera province whether the same to previous research which stated that DAU implicates the magnitude of local government expenditures.
Specific Allocation Fund (DAK) is intended to help finance specific activities in certain areas which is a regional affairs and in accordance with national priorities, specifically to fund basic services, facilities and infrastructures of society who have not reached a certain standard to accelerate regional development. In this research try to analyze the influence of the Specific Allocation Fund (DAK) to local government expenditure (BD) in South Sumatera province whether the same to previous research which stated that DAK implicates the magnitude of local government expenditures.
In this research also combine three independent variable The Original Local Government Revenues (PAD), The General Allocation Funds (DAU) ) and The Specific Allocation Fund (DAK) analyze simultaneously effect to the Local Government Expenditure (BD) whether the effect the both independent variable to local government expenditure same at the other districts/cities at the previous research.
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Figure 2.1
Theoretical Framework
D. Research Hypothesis
Based on the theoretical framework above, can be formulated these alternative hypotheses.
Ha1 : Original Local Government Revenues (PAD) significantly influence to the Local Government Expenditure (BD).
Ha2 : General Allocation Funds (DAU) significantly influence to the Local Government Expenditures (BD).
Original Local
Government Revenues (PAD)
General Allocation Fund (DAU)
Special Allocation Fund (DAK)
Local Government Expenditure (BD)
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Ha3 : Specific Allocation Funds (DAK) significantly influence to the Local Government Expenditures (BD).
Ha4 : Original Local Government Revenues (PAD), General Allocation Funds (DAU), and Specific Allocation Funds (DAK) simultaneously significantly influence to the Local Government Expenditures (BD).
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33 CHAPTER III
RESEARCH METHODOLOGY
A. Scope of Research
Type of this research is association causality aimed to analyze the relationship between variables to another variable (Sekaran, 2003: 30). In this research, there are independent variables/variables that influence and dependent variable/variable influenced. This research is conducted to determine and prove the influence Original Local Government Revenue (PAD), General Allocation Fund (DAU), and the Special Allocation Fund (DAK) as independent variables to Local Government Expenditure (BD) as the dependent variable.
B. Population and Sample
The population is a collection of all possible people, objects, or the size of the interest of the case to the attention (Sekaran, 2003:31). The population used in this research is the government of districts/cities in the province of South Sumatera, amounting to 15 districts/cities in the year 2008 to 2013 for reasons of data availability.
This research is using purposive sampling method, that is aimed by the researcher are likely to obtain information from specific target groups, the sampling here is confined to specific types of people/sample which can provide the desired information, either because they are the only ones which
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have it, or conform to some criteria set by the researcher (Indriantoro and Supomo, 2002). The criterias are :
1. District/City in Sumatera Selatan
2. Publish financial statement period of 2008-2013 3. The value of Special Allocation Fund cannot be 0 4. Having complete data as required in research
Among the number of districts/cities submitting the realization, APBD Report between 2008 and 2013 to the mentioned site are as many as 15 districts/cities in the South Sumatera Province. The 90 research data amounts to, which is derived by the formula:
N= amount of districts / cities X research period N= 15 X 6 years
N= 90
C. Data Collection Method
Data collected in this study is the quantitative data measured in a numerical scale. Secondary data is data that has been processed and presented again. According Sugiyono (2009:193), "secondary source is a source that is not directly provides data to data collectors, for example, through the document and the others”. This study uses secondary data that the financial statements the district/city of South Sumatra downloaded at laci.bps.go.id
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35 D. Data Analyze Method
The dependent variable in this study refers to the Local Government Expenditures, while the independent variables refer to the PAD, DAU and DAK. The analytical tools used are the multiple regression (multiple regression) in order to see the influence on all these variables simultaneously. Tests carried out by using the computer application program SPSS 21.0 for Windows.
1. Descriptive Statistics
Descriptive statistics give an overview or description of a data views of the value of the average (mean), minimum, maximum and standard deviation (Ghozali, 2013:19). An overview of the data produces a clear information so that the data is easy to understand. In this research, by looking at an overview of existing data, it will be obtained clear information regarding the influence of Original Local Government Revenues, General Allocation Fund and Special Allocation Fund to the Local Government Expenditure .
2. Classical Assumptions
a. Normality Test
Normality test is intended to determine whether the used data is normally distributed or not. Normality test needs to be done to determine the statistical tools, so that the conclusions drawn can be accounted for. There are two ways to detect whether or not residual normal distribution, i.e. the graph analysis and statistical tests (Ghozali, 2013: 160), namely:
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1) Graph Analysis
One of the easiest ways to see the normality of the residuals is to see a histogram graph comparing the observational data with the distribution which closes to normal distribution. More reliable method is by looking the normal probability plots comparing to the cumulative distribution of a normal distribution. Normal distribution will form a straight diagonal line and plot the data will be compared with the residual diagonal lines. If the residual data distribution is normal, then the line that describes the real data would follow the diagonal line (Ghozali, 2013: 163).
2) Statistical Analysis
Simple statistical test can be done by looking at the value of the kurtosis and Z-values of skewness. Another statistical test that can be used to test the normality of residuals is non-parametric statistical test of Kolmogorov-Smirnov (KS), if the significance level > 0.05, then the data is normally distributed and can be performed multiple regression models (Ghozali, 2013: 164). Guidelines for decision-making about the data close to or a normal distribution by Kolmogorov Smirnov can be seen from:
(a) Sig. or significantly or probability < 0.05, then the data distribution is not normal.
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(b) Sig. or significantly or probability > 0.05, then the data distribution is normal.
b. Multicollinearity Test
Multicollinearity test aims to test whether the regression model found a correlation between the independent variables (Ghozali, 2013:105). A good regression model should not happen correlation between the independent variables. To detect the presence or absence of multicollinearity in the regression model can be seen from the value of tolerance and the Variance Inflation Factor (VIF). Multicollinearity views of the tolerance value <0.10 or VIF> 10. Both of these measurements indicate each independent variable which is explained by the other independent variables.
c. Autocorrelation Test
Autocorrelation test aims to test something, in a linear regression model. There is a correlation between the error of a bug in the period t to bug errors t-1 period or previous period (Ghozali 2013:110). Diagnose the autocorrelation done through testing to test the value of Durbin Watson (DW test) by (Ghozali 2013:111). Basis for decision-making as follows:
1) If 0 < DW< DL there is any positive autocorrelation.
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3) If 4-DL < Dw < 4 there is any negative autocorrelation.
4) If 0 < Dw < DL or Du < Dw < 4-Du there is no autocorrelation.
d. Heteroscedasticity Test
According to Ghozali (2013 : 139), heteroscedasticity means there is a variant that is not the same for different independent variables. It can be detected by observing how the points on the scatterplot between the estimated values of Y with residual value (the difference between the actual dependent variable predictive values) versus the value of the prediction spread or not to form a pattern. If the graph has a standardized residual axis of the X and Y axis that has been predicted not to form a clear pattern (wavy, widened, then narrowed), as well as scattered both above and below the 0 on the Y axis Heteroscedasticity it did not happen.
Some ways to detect the presence or absence of heteroscedasticity:
1) If there is a specific pattern, such that there are points that form a regular pattern (wavy, widened and then narrowed), it has been indicated heteroscedasticity.
2) If there is no clear pattern, and the points spread above and below the 0 on the Y axis, then it does not happen heteroscedasticity.
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39 3. The Result of Multiple Regression Test
a. Multiple Regression
To test the hypothesis (Ha), the method of analysis used is multiple regression, because it involves three independent variables and one dependent variable (Ghozali, 2013 : 96). Regression equation model to test the hypothesis with the following formulation:
BD = α + β1 PAD + β2DAU + β3 DAK × Ԑ
b. Test Coefficient of Determination ( R2)
The coefficient of determination (R2) was essentially measure how far the model's ability to explain variation in the dependent variable. Determination coefficient is between zero and one. Small value of R2 is the ability of independent variables in explaining the dependent variable is very limited. Value close to one means that the independent variable gives almost all the information needed to predict the variation in the dependent variable (Ghozali, 2013: 97). Coefficient determination is a statistical measurement of how well the regression line approximates the real data point. By knowing the value of R2, It can determine the magnitude contribution of independent variables toward the dependent variable. R2 expresses a value between zero and one. If R2 is near to 0, most of data variations cannot be
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explained by the regression model. In this case, the regression model fits the data poorly. On the other hand, if R2 is near to 1, most of the variation in the dependent variable can be explained by the regression model. In other words, the regression model fits the data well (Sekaran, 2010).
The closer adjusted R2 score to 1, the better independent variables explaining dependent variable The hypothesis in this study is influenced by the value of the corresponding variable coefficient significance after testing. Conclusion the hypothesis made by t-test.
4. Hypothesis Testing
a. Simultaneous Significance Testing ( F- Test)
Essentially, F- test has purpose to know whether among independent variables simultaneously have significant influence toward dependent variable (Ghozali, 2013: 98). Independent variables in this research are Original Local Government Revenue (PAD), General Allocation Fund (DAU) and Special Allocation Fund (DAK) whereas dependent variable is Local Government Expenditure (BD). So, F- test has a function to know the influence Original Local Government Revenue (PAD), General Allocation Fund (DAU) and Special Allocation Fund (DAK) whereas dependent variable is Local
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Government Expenditure (BD). α used for this research is 0.05 ( 5%) with assumption:
1). α > 0,05 Ho is accepted
2). α < 0,05 Ho is rejected
b. Partial Significance Test ( t- Test)
Partial Significance Test or t- test basically has purpose to know how far and how much the influence independent variables toward dependent variables partially (Ghozali, 2013:98). In this research, t- test is done to know the influence of Original Local Government Revenue (PAD) General Allocation Fund (DAU), and Special Allocation Fund (DAK) as independent variables towards Local Government Expenditure (BD) as dependent variable.
Assumption used for this test are if the significance value of t more than α (significance value > α), then hypothesis is rejected but
if on contrary the significance value of t less than α (significance value < α), so hypothesis is accepted. Level of significance (α) use in this research is 0.05 (5%).
E. Definition Of Operational Variable
1. Local Government Expenditures (BD)
Local Government Expenditures are government expenditures within a certain budget period (one year). In order to facilitate the
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assessment of the reasonability of the costs of programs or activities, expenditures are summarized into expenditure groups, which consist of indirect expenditures and direct spending (Halim, 2009). Expenditures in this study can be ascertained from Local Government Expenditures in the consolidated budget realization of district/city governments in South Sumatera province from 2008 to 2013.
The allocation of expenditures consists of indirect expenditures and direct expenditures. Indirect expenditures are expenditures that do not have a direct effect to the implementation of government programs and activities and are composed of personnel expenditures, interest expenditures, subsidies, and grants, expenditures for social assistance, financial assistance expenditures and unexpected expenditures (Puspita Sari, 2010). The formula for calculating the allocation of indirect expenditures (ABTL) is the following:
ABTL = office expenditures + interest expenditures + subsidy expenditures + grant expenditures + social assistance + financial assistance expenditures + unexpected expenditures
Direct expenditures are expenditures that have a direct effect to programs and activities that include government expenditures, expenditures on goods and services and capital expenditures (Puspita sari, 2010). The formula for calculating the allocation of direct expenditures (ABL) is the following:
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ABL = office expenditures + goods and services expenditures + capital expenditures.
BD = ABTL + ABL LNBD = The amount of LNBD
2. Original Local Government Revenues (PAD)
According to Suparmoko (2012: 159) is a Original Local Government Revenue (PAD) of local government revenue sourced from the local taxes, levies results, and the results were separated areas of wealth management, as well as other legitimate revenue. PAD in this study can be ascertained from Local Government Expenditures in the realization of the consolidated government budget of 15 districts/cities in South Sumatera from 2008 to 2013.
The total PAD is realization contained in the budget realization report 2008 to 2013. Total Original Local Government Revenue includes local taxes, levies, local owned company results and the results of management.
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44 3. General Allocation Funds ( DAU)
According to Dhikrullah (2014), General Allocation Fund (DAU) is a fund that is derived from the receipt of State Budget (budget) allocated to the region in the form of a block grant utilization is left entirely to the area. General Allocation Fund (DAU) is "Block Grant" which means that its use be submitted to the area in accordance with the priorities and needs of the region to improve services to the community in the implementation of regional autonomy.
DAU is obtained by looking at the General Allocation Funds (DAU) account in the realized budget reports 2008 to 2013 of the 15 districts/cities in the South Sumatera province.
LNDAU = The amount of LNDAU
4. Specific Allocation Fund (DAK)
Special Allocation Fund is a fund of the state budget allocated to certain areas with the purpose to help fund special activities of regional affairs and in accordance with national priorities. DAK is obtained by looking at the Special Allocation Fund (DAK) account in the realized budget reports 2008 to 2013 of the 15 districts/cities in the South Sumatera province.
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45 CHAPTER IV RESULT AND ANALYSIS
A. General Description of Research Object
This chapter will discuss the results of the analysis in detail along with the steps of the data analysis. This study aimed to determine the influence of the Original Local Government (PAD), General Allocation Fund (DAU), and Special Allocation Fund (DAK) for Local Government Expenditures (BD). The research objects are 15 districts/cities in South Sumatera Province, for the period of 2008-2013. The Local Governments which are the object in this research is 15 districts/cities in South Sumatera Province, as follows:
Table 4.1
Name of Districts/Cities in South Sumatera No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Name Banyuasin Empat Lawang Lahat Lubuk Linggau Musi Banyuasin Muara Enim Musi Rawas Ogan Ilir
Ogan Komering Ilir Ogan Komering Ulu
Ogan Komering Ulu Selatan Ogan Komering Ulu Timur Palembang
Pagar Alam Prabumulih
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The amount of data in this study (n) is 84, the data obtained from the realization of the 2008-2013 budget report distritcs/cities in South Sumatera Province, That is downloaded via the site laci.bps.go.id, includes data on Original Local Government Revenue (PAD), the General Allocation Fund (DAU), Special Allocation Fund (DAK) and the Local Government Expenditure (BD). In the research uses purposive samlping, based on criteria chapter three. The following criteria are:
Table 4.2 Sampling Criteria
No Criteria Total of
Districts/Cities
Totaly of Year Totaly of Sample 1 2 3 4 Districts/Cities in South Sumatera Not publish finacial statement of 2008 to 2013 DAK has a value of 0
Data not complete Finally of sample
0 0 (1) 0 14 0 0 (6) 0 0 0 (6) 0 84
B. Descriptive Statistic
Descriptive statistics provide an overview of the minimum value, maximum value, average value (mean) and standard deviation of the data used in this research.
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47 Table 4.3
Descriptive Satistics
N Minimum Maximum Mean Std.
Deviation
LNPAD 84 21.64 25.97 25.97 .87
LNDAU 84 25.11 27.55 27.55 .50
LNDAK 84 22.25 25.31 25.31 .56
LNBD 84 26.15 28.58 28.58 .48
Valid N (Listwise) 84
Source : Secondary Data Output From SPSS 21
1. Original Local Government Revenue Explanation (PAD)
Original Local Government Revenue has a minimum value at 21,64. The results showed the lowest Original Local Government Revenue (PAD) in South Sumatra obtained from the district Empat Lawang in 2008. Therefore Empat Lawang is still very dependent on the central government to finance the Local Government Expenditure (BD), so Empat Lawang should increase revenue by digging continued sources of income The Original Local Government Revenue (PAD) is itself both intensification and extensification.
Original Local Government Revenues (PAD) have a maximum value of 25,97. The results showed the highest Original Local Government Revenue (PAD) in South Sumatra obtained from the city of Palembang in 2013. Therefore, with high Original Local Government Revenue (PAD) in Palembang city have greater independence of regional autonomy in the
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area of development finance compared to the District/City in South Sumatra.
Original Local Government Revenues (PAD) have an average value (mean) for six years amounting to 24,15. Original Local Government Revenues (PAD) have a standard deviation value of 0,87 smaller than the mean value of Original local government revenues 24,15. It's show the data normally distributed.
2. Explanation of General Allocation Funds (DAU)
General Allocation Funds have a minimum value of 25,11. The results show the lowest General Allocation Funds in South Sumatera Province, which obtained from Musi Banyuasin in 2010. This result proves even Musi Banyuasin district area as not broad as Palembang but Musi Banyuasin district able to be independent in financing the implementation of regional autonomy.
General Allocation Funds have a maximum value of 27,55. The results showed the highest General Allocation Fund in South Sumatra obtained from Palembang in 2013. This proves Palembang is still very dependent on the central government.
General Allocation Funds have been achieving an average value (mean) for six years in consideration which amounts to 26,61. General Allocation Funds have a value of 0,50 standard deviations smaller than the mean of 26,61 showed that the data distribution tends to normal.
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49 3. Explanation Special Allocation Fund (DAK)
Special Allocation Fund have a minimum value of 22,25. The results show the lowest General Allocation Funds in South Sumatera Province, which obtained from Empat Lawang district in 2008. This result proves even Empat Lawang district area as not broad as Palembang but Empat Lawang district able to be independent in financing the implementation of regional autonomy.
Special Allocation Fund have a maximum value of 25,31. The results showed the highest Special Allocation Funds in South Sumatera Province obtained by Banyuasin district in 2013. These results indicate that the local government is still heavily dependent on funds from the central government to finance specific activities that are national priorities. Special Allocation Funds have been achieving an average value (mean) for six years in consideration which amounts to 24,42. Special Allocation Funds have a value of 0,56 standard deviations smaller than the mean of 24,42 showed that the data distribution tends to normal.
4. Explanation Local Government Expenditures (BD)
Local Government Expenditures (BD) in South Sumatera province have a minimum value of 26,15. The results showed that the lowest Local Government Expenditure (BD) in South Sumatera Province spent by Empat Lawang district in 2008. This proves Empat Lawang district with
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areas that are not so vast and sparsely populated compared to the number of districts/cities in South Sumatera Province.
Expenditures have a maximum value of 28,58. The research results has shown that the highest Local Government Expenditures (BD) in South Sumatera province has been spent by the Palembang city in 2013. This proves the Palembang has the highest expenditures compared to other districts/cities.
Local Government Expenditures (BD) in the South Sumatera Province have an average value (mean) for three years amounting to 27,43. Local Government Expenditures (BD) have a standard deviation value of 0,48 smaller than the mean of 27,43 shows that the distribution of the data tends to be normal.
C. Analysis and Discussion 1. Classic Assumption Test
Classic assumption test consists of normality test, multicollinearity test, autocolleration test, heterocedacity test.
a. Normality Test
This test is used to produce a more detailed figures, whether a regression equation that used escape normality test. A regression equation is said to escape normality if the value of the Kolmogorov-Smirnov significance greater than 0.05 (Ghozali, 2013: 164).
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51 Table 4.4
One-Sample Kolmogorov-Smirnov Test
Unstandardized Residual
N 84
Kolmogorov-Smirnov Z .529
Asymp. Sig. (2-tailed) .943
a. Test distribution is Normal. b. Calculated from data.
Source : Secondary Data Output From SPSS 21
Based on the results of statistical tests with models such as the Kolmogorov-Smirnov contained in table can be concluded that the data were normally distributed. It can be seen from the significance value of 0.943 is greater than 0.05. The result is shown in.
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52 Figure 4.1
Source : Secondary Data Output From SPSS 21
Based on Figure 4.1 it can be seen that the points spread around the diagonal line follow the direction of a diagonal spread. Thus it can be stated that the distribution of the data close to normal or have met the assumptions of normality. It can also be viewed using the histogram graph as follows:
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53 Figure 4.2
Source : Secondary Data Output From SPSS 21
Histogram graph showing a normal distribution pattern because the graph does not deviate to the left or off to the right.
b. Multicollinearity Test
Multicollinearity test aims to test whether the regression model found a correlation between the independent variables (Ghozali, 2013:105). A good regression model should not have correlation between the independent variables. To detect the presence or absence of multicollinearity in the regression model can be seen from the value of tolerance and the variance inflation factor opponent (VIF).
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Multicollinearity views of the tolerance value > 0.10 or VIF < 10 it can be said to be free of multicollinearity.
VIF values and tolerance of other research variables can be seen from the following table.
Table 4.5
Coefficientsa
Model Collinearity Statistics Tolerance VIF
1
(Constant)
LNPAD .605 1.653
LNDAU .521 1.918
LNDAK .828 1.208
a. Dependent Variable: LNBD
Source : Secondary Data Output From SPSS 21
Based on table 4.5 above, it can be concluded this study is multicollinearity symptom free. All independent variables have VIF values less than 10. In addition, each independent variable tolerance value is greater than 0.1. Thus there is no multicollinearity in this regression model.
c. Autocorrelation Test
According Ghozali (2013:111), for detecting the presence or absence of autocorrelation can use the Durbin-Watson test (DW test). Here is the Durbin-Watson test result.
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55 Table 4.6
Source : Secondary Data Output From SPSS 21
The criteria for the assessment of the autocorrelation are: 1) If 0 < Dw < DL there is any positive autocorrelation.
2) If DL < Dw < Du or 4-Du < D < 4-DL uncertain conclusion. 3) If 0 < Dw < DL or Du < Dw < 4-Du there is no autocorrelation. 4) If 4-DL < Dw < 4 there is any negative autocorrelation.
From the table above, note that the value obtained for DW 1.869, which means including the third criteria, (Du=1,7119 < Dw 1.869 < 4-Du= 2,2881) so we can conclude that there is no autocorrelation in this regression model too.
d. Heteroscedasticity Test
This test is done by observing certain chart patterns scatterplot, where if there is a point-point spread above and below the 0 on the Y axis and does not constitute that it does not happen heteroscedasticity (Ghozali, 2013 : 139). Scatterplot graphs can be seen in figure below.
Model Summaryb
Model Durbin-Watson
1 1.869
a. Predictors: (Constant), LNDAK, LNPAD, LNDAU b. Dependent Variable: LNBD
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Figure 4.3
Source : Secondary Data Output From SPSS 21
From figure 4.3 shown that there is no clear pattern, as well as the dots spread above and below zero (0) on the Y axis. So it can be concluded that there is no heterocedastisity.
2. The Result of Multiple Regresion Testing a. Multiple Regression Analysis
This research will show to us about the effect of independent variables Original Local Government Revenues (PAD), Geneal Allocation Funds (DAU), and Special Allocation Funds (DAK) on the dependent
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APPENDIX II
OUTPUT SPSS
Descriptive Statistics
N Minimum Maximum Mean Std. Deviation LNPAD 84 21.64 25.97 24.1750 .87205 LNDAU 84 25.11 27.55 26.6124 .50667 LNDAK 84 22.25 25.31 24.4225 .56133 LNBD 84 26.15 28.58 27.4354 .48739
Valid N (listwise) 84
One-Sample Kolmogorov-Smirnov Test
Unstandardized Residual
N 84
Normal Parametersa,b Mean .0000000 Std. Deviation .21069671
Most Extreme Differences
Absolute .058 Positive .058 Negative -.050 Kolmogorov-Smirnov Z .529 Asymp. Sig. (2-tailed) .943 a. Test distribution is Normal.
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Coefficients
aModel Unstandardized Coefficients
Standardized Coefficients
t Sig. Collinearity Statistics
B Std. Error
Beta Tolerance VIF
(Constant) 9.595 1.369 7.010 .000
LNPAD .432 .035 .772 12.427 .000 .605 1.653 LNDAU .057 .064 .059 .880 .382 .521 1.918 LNDAK .241 .046 .278 5.235 .000 .828 1.208 a. Dependent Variable: LNBD
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Model Summary
bModel R R Square Adjusted R Square
Std. Error of the Estimate
Durbin-Watson
1 .902
a
.813 .806 .21461 1.869
a. Predictors: (Constant), LNDAK, LNPAD, LNDAU b. Dependent Variable : LNBD
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Model Summary
bModel R R Square Adjusted R Square
Std. Error of the Estimate
1 .902a .813 .806 .21461
a. Predictors: (Constant), LNDAK, LNPAD, LNDAU b. Dependent Variable: LNBD
Coefficients
aModel Unstandardized Coefficients
Standardized Coefficients
B Std. Error Beta
1
(Constant) 9.595 1.369
LNPAD .432 .035 .772
LNDAU .057 .064 .059
LNDAK .241 .046 .278
a. Dependent Variable: LNBD
ANOVA
aModel Sum of
Squares
df Mean Square F Sig.
1
Regression 16.032 3 5.344 116.027 .000b Residual 3.685 80 .046
Total 19.717 83 a. Dependent Variable: LNBD
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Coefficients
aModel Unstandardized Coefficients Standardized Coefficients
t Sig.
B Std. Error Beta
1
(Constant) 9.595 1.369 7.010 .000 LNPAD .432 .035 .772 12.427 .000 LNDAU .057 .064 .059 .880 .382 LNDAK .241 .046 .278 5.235 .000 a. Dependent Variable: LNBD