The results in education for allchildren (REACH) trust fund at the World Bank funded anevaluation that assessed the early impact of aperformance-based school grants program on student learningin Indonesia. This evaluation focused on two separateeffects in the first two years of the new program: theeffect of announcing the performance-based incentive toschools, and the effect of receiving the bonus for topperforming schools. Announcing the performance incentive haddifferent impacts on primary and junior secondary schools.Student test scores improved in all junior secondaryschools, with the largest gains being made in schools thatwere already the highest performing. The effect of theprogram on learning was largely due to the change inincentives created by announcing the performance-basedgrants, rather than by the additional grant funding itself.Future programs can be improved by using other measures ofschool performance in addition to test scores, consideringalternative designs of the formula to determine grantallocations, and allowing schools more flexibility inexperimenting with ways to improve learning.