This paper examines the negative effect of the trilateral reforms promoted by central government and aims to propose decentralized reform ideas for financing compulsory education. The current progress of the trilateral reforms seems to deviate from the focus of the reforms with regard to the independence and soundness of financing from local government. Central government gives top priority to transfer sources of tax to local governments and to a reduction of state liability and subsidies in order to secure sources of revenue. As a result, the disparity of general revenue sources has increased among local governments. In order to correct this situation, the central government delays reform of local tax-allocation methods. The most important issue is to postpone the solution of problems of local tax-allocation methods that impair the independence and soundness of financing from local government because of the above situation. Based on the awareness of this problem, this paper examines the negative effect of the trilateral reforms promoted by central government and demonstrates the following analysis and proposes the establishment an education-specific subsidy system that would ensure a "national minimum" for compulsory education. 1. The current local tax-allocation methods provide local governments with both a revenue source guarantee function to ensure a "national minimum" and a finance adjustment function to correct tax revenue disparity among local governments. Because arbitrary amalgamation of these two functions continues, these methods have acquired strong characteristics as policy incentive subsidies to develop local economies and promote business conditions since 1985 and the amount of subsidy has skyrocketed. 2. Because the current financial crisis in local governments resulted from this mechanism of tax allocation and its operation, it is desirable to establish systems assuring revenue sources and financial adjustments to guarantee a new "national minimum" by separating the revenue source guarantee function from the financial adjustment function and abolishing the current tax allocation system and the national government's share of compulsory education costs. 3. Specifically, this paper proposes the establishment of an education-specific subsidy system that would ensure a "national minimum" for compulsory education. Consequently, central government sets the standard of a "national minimum" for compulsory education and provides local governments with the necessary revenue sources as comprehensive subsidies. Local governments can implement the creative operation of compulsory education based on the "national minimum." Consequently, it becomes possible to clarify the roles and responsibilities of the central and local governments.