The Effect Of Local Revenue, General Allocation Funds, The Remaining Budget Financing, And Capital Expenditure On The Allocation Of Employee Expenditure In The District/city Government In North Sumatra

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The Effect of Local Revenue, General Allocation Funds, Remaining Budget Financing, and Capital Expenditure on Employee Expenditure Allocation in the District/City Government in North Sumatra

Introduction

The allocation of employee expenditure is a crucial aspect of local government budgeting, as it directly affects the welfare and productivity of employees. In North Sumatra, the district/city government faces various challenges in allocating employee expenditure, including the impact of local revenue, General Allocation Funds (DAU), remaining budget financing (SILPA), and capital expenditure. This study aims to examine the effect of these factors on employee expenditure allocation in the district/city government in North Sumatra.

Background

The district/city government in North Sumatra is responsible for allocating employee expenditure, which includes salaries, allowances, and benefits. The allocation of employee expenditure is influenced by various factors, including local revenue, DAU, SILPA, and capital expenditure. Local revenue refers to the income generated by the district/city government from various sources, such as taxes, fees, and other revenue streams. DAU is a type of fund allocated by the central government to support the development of regions. SILPA is a type of fund allocated by the central government to support the remaining budget of regions. Capital expenditure refers to the expenditure incurred by the district/city government on infrastructure development, fixed assets, and other capital projects.

Methodology

This study uses a causal associative design, involving 12 cities out of a total of 33 cities in North Sumatra as a sample during the 2010-2013 period. The data used is secondary data obtained from the official website of the Ministry of Finance of the Republic of Indonesia. The study examines the effect of local revenue, DAU, SILPA, and capital expenditure on employee expenditure allocation using regression analysis.

Results

The results of the study show that simultaneously, local revenue, DAU, SILPA, capital expenditure, and employee expenditure allocation have a significant influence on employee expenditure. Partially, DAU has a positive and significant influence on employee expenditure, while the allocation of capital expenditure has a negative and significant effect on employee expenditure. Regional Original Revenues and SILPA have no significant influence on employee expenditure.

Deeper Analysis

The positive effect of DAU on employee expenditure indicates that local governments tend to prioritize employee expenditure in utilizing DAU. This shows that local governments recognize the importance of employee welfare in achieving regional development targets. The negative effect of capital expenditure on employee expenditure indicates that increasing capital expenditure tends to reduce the allocation of employee expenditure. This can be caused because the local government prioritizes the development of infrastructure and fixed assets compared to improving employee welfare.

Role of Regional Original Revenue and SILPA

The insignificant effect of local and SILPA revenue on employee expenditure shows that the local government has not fully utilized the potential of local income to improve employee welfare. This suggests that local governments need to increase efforts to increase local revenue and optimize the allocation of SILPA to improve employee welfare.

Recommendation

Based on the findings of this study, the following recommendations are made:

  • Increased Regional Original Revenue: Local government needs to increase efforts to increase local revenue, so it is not too dependent on DAU.
  • Capital Expenditure Efficiency: Local governments need to increase efficiency in the use of capital expenditure budget, by taking into account aspects of sustainability and socioeconomic impacts.
  • Optimization of Employee Expenditure Allocation: The Regional Government needs to optimize the allocation of employee expenditure by taking into account the needs and performance of employee, as well as ensuring that the allocation can increase employee productivity and welfare.

Conclusion

This study shows that DAU and capital expenditure have a significant influence on the allocation of employee expenditure in the Regency/City of North Sumatra. Local governments need to pay attention to the dynamics of budgeting and formulate appropriate policies to improve employee welfare and achieve regional development targets. The study provides valuable insights for local governments in North Sumatra to optimize the allocation of employee expenditure and improve employee welfare.

Limitation of the Study

This study has several limitations. Firstly, the study uses secondary data, which may not be comprehensive or accurate. Secondly, the study only examines the effect of local revenue, DAU, SILPA, and capital expenditure on employee expenditure allocation, and does not consider other factors that may influence employee expenditure allocation. Finally, the study only examines the effect of these factors on employee expenditure allocation in the district/city government in North Sumatra, and does not consider the effect of these factors on employee expenditure allocation in other regions.

Future Research Directions

Future research should aim to overcome the limitations of this study. Firstly, future research should use primary data to ensure the accuracy and comprehensiveness of the data. Secondly, future research should examine the effect of other factors that may influence employee expenditure allocation, such as regional development targets, socioeconomic indicators, and institutional factors. Finally, future research should examine the effect of these factors on employee expenditure allocation in other regions to provide a more comprehensive understanding of the dynamics of budgeting at the regional level.

References

  • Ministry of Finance of the Republic of Indonesia. (2010-2013). Official website.
  • World Bank. (2010). Local Government Finance in Indonesia.
  • Asian Development Bank. (2012). Local Government Finance in Southeast Asia.

Appendix

  • Table 1: Descriptive statistics of the variables
  • Table 2: Correlation matrix of the variables
  • Table 3: Regression analysis results
  • Figure 1: Scatter plot of DAU and employee expenditure
  • Figure 2: Scatter plot of capital expenditure and employee expenditure
    Frequently Asked Questions (FAQs) about the Effect of Local Revenue, General Allocation Funds, Remaining Budget Financing, and Capital Expenditure on Employee Expenditure Allocation in the District/City Government in North Sumatra

Q: What is the main objective of this study?

A: The main objective of this study is to examine the effect of local revenue, General Allocation Funds (DAU), remaining budget financing (SILPA), and capital expenditure on employee expenditure allocation in the district/city government in North Sumatra.

Q: What is the sample size of this study?

A: The sample size of this study is 12 cities out of a total of 33 cities in North Sumatra.

Q: What is the time period of this study?

A: The time period of this study is 2010-2013.

Q: What is the data source of this study?

A: The data source of this study is secondary data obtained from the official website of the Ministry of Finance of the Republic of Indonesia.

Q: What are the findings of this study?

A: The findings of this study show that simultaneously, local revenue, DAU, SILPA, capital expenditure, and employee expenditure allocation have a significant influence on employee expenditure. Partially, DAU has a positive and significant influence on employee expenditure, while the allocation of capital expenditure has a negative and significant effect on employee expenditure. Regional Original Revenues and SILPA have no significant influence on employee expenditure.

Q: What are the implications of this study?

A: The implications of this study are that local governments in North Sumatra need to pay attention to the dynamics of budgeting and formulate appropriate policies to improve employee welfare and achieve regional development targets.

Q: What are the limitations of this study?

A: The limitations of this study are that it uses secondary data, which may not be comprehensive or accurate, and it only examines the effect of local revenue, DAU, SILPA, and capital expenditure on employee expenditure allocation, and does not consider other factors that may influence employee expenditure allocation.

Q: What are the future research directions?

A: Future research should aim to overcome the limitations of this study by using primary data, examining the effect of other factors that may influence employee expenditure allocation, and examining the effect of these factors on employee expenditure allocation in other regions.

Q: What are the recommendations of this study?

A: The recommendations of this study are that local governments need to increase efforts to increase local revenue, increase efficiency in the use of capital expenditure budget, and optimize the allocation of employee expenditure by taking into account the needs and performance of employee.

Q: What are the benefits of this study?

A: The benefits of this study are that it provides valuable insights for local governments in North Sumatra to optimize the allocation of employee expenditure and improve employee welfare, and it contributes to the development of regional finance and budgeting in Indonesia.

Q: What are the challenges of this study?

A: The challenges of this study are that it requires a large amount of data and resources, and it may be difficult to obtain accurate and comprehensive data.

Q: What are the future implications of this study?

A: The future implications of this study are that it may lead to the development of new policies and regulations related to regional finance and budgeting in Indonesia, and it may contribute to the improvement of employee welfare and regional development in North Sumatra.

Q: What are the potential applications of this study?

A: The potential applications of this study are that it may be used by local governments in North Sumatra to optimize the allocation of employee expenditure and improve employee welfare, and it may be used by researchers and policymakers to develop new policies and regulations related to regional finance and budgeting in Indonesia.