Is equitable financing enough? Budget allocation effectiveness, financing efficiency, and educational service quality in primary and secondary schools in West Java, Indonesia

Equitable distribution of education funding is widely promoted as a policy lever for raising school education standards and narrowing quality gaps between schools in Indonesia. Yet empirical evidence on whether equity in financing translates into better educational services remains limited, and the role of financing efficiency in this process has received little attention. This study examines how budget allocation effectiveness, equity in education financing, and stakeholder collaboration relate to financing efficiency and to the quality of educational services in primary and secondary schools in West Java, Indonesia, whether financing efficiency mediates these relationships, and how school stakeholders explain them. A convergent mixed-methods design was employed. Closed and open-ended questionnaire responses from 143 principals, teachers, and school supervisors were analyzed using partial least squares structural equation modeling and thematic analysis. Financing efficiency showed the strongest association with service quality, and budget allocation effectiveness was the strongest predictor of financing efficiency. Financing efficiency also mediated the relationship between budget allocation effectiveness and service quality. By contrast, equity in education financing was not significantly associated with service quality, either directly or indirectly through efficiency, and several smaller paths reached significance only under directional tests. Qualitative evidence suggests that uneven teacher competence, limited managerial capacity, and regional disparities constrain the conversion of equitably distributed funds into service improvements. The findings indicate that equity in funding distribution may be a necessary but insufficient condition for quality, whereas the capacity to allocate and use funds well is more closely linked to service quality. Implications for needs-based funding combined with institutional capacity building are discussed.