This study aims to analyze the development of the compulsory national education system of Taichung, Changhua and Nantou areas and examine the allocation of education budgets of the counties and cities in these areas in the fiscal year 2014. It identified two issues that remain unresolved. First, they have financial difficulties with significant differences among them. Second, their education programs were poorly funded and the distribution of their education funding was conducted improperly. Although Changhua and Nantou counties received more public finance to support their elementary and high school education, the quality of education that students received largely depended on the resources of the students' families. In urban districts of Taichung City where parents enjoy relatively high socioeconomic status, private spending on education far exceeds that of the Changhua and Nantou counties. This study offers the following suggestions. First of all, due to the vast disparity in teaching and learning environment among counties and cities, the allocation of education funding should obey the concept of Capital Adequacy Ratio and schools should take the responsibility to improve their own performance. Secondly, governments of the Taichung-Changhua-Nantou area should actively explore new sources of revenue and try to acquire more subsidies from the Central Government by seeking to modify the Act Governing the Allocation of Government Revenues and Expenditures. Thirdly, governments of the Taichung-Changhua-Nantou area should request that the faculty pension fund be separated from the minimum education spending required in law. Fourthly, subsidy for students' lunches should be provided appropriately and students from richbackgrounds should be excluded. Then, the distribution of education funding must actualize the principles of horizontal fairness, vertical fairness, equal opportunity, and fiscal neutrality. Finally, the consolidation of small schools helps alleviate local governments' burdens in education financially-nonetheless, it is by no means an easy task.