Central Java Hopes for No Further Cuts to Regional Transfer Funds in 2027

The Central Java Provincial Government is hoping that the central government will not again cut the Regional Transfer Fund (TKD) in 2027, as the majority of districts and cities in the region are heavily dependent on these transfers. Dwianto Priyonugroho, Head of the Regional Financial and Asset Management Agency (BPKAD) of Central Java Province, stated that cumulatively, the TKD cuts for local governments in Central Java in 2026 reached more than IDR 11 trillion. The cut experienced by the Central Java Provincial Government alone amounted to IDR 1.5 trillion, with the remainder spread across 35 districts and cities.

Dwianto explained that, on average, 85 percent of district and city government income relies on central and provincial transfer funds. Furthermore, he noted that average personnel expenditure budgets in these local governments already exceed 30 percent, with some approaching 40 percent. This is despite Law Number 1 of 2022 on Financial Relations between the Central Government and Regional Governments, which stipulates a maximum personnel expenditure of 30 percent of the Regional Budget (APBD).

However, Dwianto stressed that exceeding this limit cannot simply be labelled as waste, as it is largely driven by the need to meet minimum service standards in education, which requires a large number of teachers. He clarified that the majority of personnel spending above 30 percent in districts and cities is allocated for educators, including the salaries of Government Employees with Work Agreements (PPPK) at the elementary and junior high school levels, which are borne by the local government budget. He therefore expressed hope that TKD allocations would not be cut in 2027 and could even increase compared to 2026. When asked about the possibility of reducing PPPK numbers if local fiscal capacity is inadequate, Dwianto said it depends on needs, as minimum service standards must still be met, and he urged all local governments to re-identify their actual personnel requirements across all agencies, including schools.