The current education system in Indonesia has shown limited success. While it manages to widen participation access to allow primary students and junior secondary students to enjoy basic education, with figures reaching 99% and 94% respectively (BPS, 2015), it is the quality of education that has been of concern. With the budget size available for national education, improving the quality of education is the mandate of all parties concerned.

The quality of education is below expectation as attested by a number of education quality measurement indices. There has been a significant drop in the average score in the national examination between 2015 and 2016, from 61.29 to 54.78 (Antaranews, 2016). Student performance in basic school subjects such as Mathematics and Science have also seen a decline as evidenced by research conducted by Trends in International Mathematics and Science Study (TIMSS) and Progress in International Reading Literacy Studies (PIRLS), showing the national student performance lag behind that of other countries in the world.

The budget allocation for education has also been under scrutiny, where there is a discrepancy between what is expected in the raising of Indonesian teacher salaries. The raise in salary does not actually correspond to a recorded improvement of teachers as suggested by De Ree J (2012). Findings from the World Bank that suggests most of the government spending on education went to teacher allowances, at $3.5 billion out of the total education spending of $7 billion.

One of the possibilities for this discrepancy is identified in the absence of the empowerment of students and their parents. In many of the cases observed, parents are yet to voice their concern over the management of the educational system. Schools do not usually attend to the needs and suggestions of parents, as schools understand that they need only to report to the government agencies responsible for education. On the other hand, parents in private school demonstratemore power to participate in education systems as schools usually recognize their role as significant sources of funding for the school.

This paper argues that in order to improve the school management and quality of education, the system of school financing needs to change. Students, represented by their parents, should have the liberty to control their finances and choose the schools deemed relevant to their own needs. By handing the power to choose to the hands of the parents/students, they can be held accountable for their own choice of education. By attaching education financing to the parents/students, it is argued that the students will have more power to choose which schools will give them better services and it will also bring more accountability to students as the real beneficiaries of education (Shah and Braun-Munzinger, 2006; Astle, S. Bryant, and C. Hotham,2011; Sjunnesson, 2012).

This system has been implemented in several places with varying degrees of success, in countries such as the United States, Sweden, the Netherlands, and Chile. There are four types school choice programs, namely school vouchers, education saving accounts (ESA), tax credit scholarship and individual tax credits and deduction.

This paper will review the advantages and disadvantages of this program, by drawing on someexamples of best practice from some of the countries mentioned above. However, this paper will introduce and discuss the first two forms of school choice; school vouchers and Education Saving Account (ESA), as the tax credit scholarship and individual tax credits and deduction schemes use a tax-based approach which would be difficult to be implement in Indonesia since the Indonesian tax system is not as advanced as developed countries.

As a study of school choice programs aimed at providing policy recommendations for the improvement of education performance in Indonesia, this paper will start by discussing the concept of school choice including school voucher and ESA programs and their respective benefits to the education system. The second section will discuss the implementation of school vouchers and ESA program worldwide and analyze success stories as well as the shortcomings in the implementation of both programs as a lesson learned for Indonesia. The last section will present some policy recommendations in order to provide policy frameworks that suit the
implementation of school choice programs.