The Ministry of Health had set target it and obligatory for minimum health standard (KW-SPM) that has to be implemented in each district/municipality. Maternal and neonatal health (MNH) services is one of the services in district health system that has to be delivered by puskesmas to improve the maternal and neonatal health towards reducing the maternal and neonatal mortality. It was a cross sectional study on health policy and financing. The study was conducted in three districts/municipality, namely Badung District, Bali; Tanah Datar District, West Sumatera and Kupang Municipality in East NusaTenggara. Time of the study was February to November 2006. Results showed that the highest allocation of budgetting according to the district health competency was for basic health services, the preventions of communicable diseases, and nutrition program. Budget allocation for investation in maternal and neonatal health was relatively low, only 2-7%. except for Badung District that was 47.2%. The allocated budget for the basic health services has a similar pattern among theareas under study, except for Tanah Datar District, the proportion of operational costs for immunization seem lower than two other districts. There gap between budget allocation and budget necessity. The budget was hardly used to serve the community. Indirect budget, most of provided for staff trainings, building capacity, as well as facility improvements. Per capita allocation for MNH varied among the districts/municapality. Badung District got the lowest (Rp. 20,000) per capita allocation, albeit it had the highest fiscal capacity; meanwhile Tanah Datar District, the middle fiscal capacity had the highest (Rp. 47,000). Kupang Municipality. the lowest fiscal capacity had the middle per capita allocation, which was Rp. 40,000. According to the health services function, the proportion allocating for training was the highest, more than 70% (Kupang and Tanah Datar Districts), and basic health services achieving 50% of the budget was in Badung. In conclusion, budget allocation was varied among the districts, the proportion was burden to public administration and only small part for the operational. Of the total health budget, the highest proportion or 30-35% was financing to the MNH programs. Unfortunately, the allocalton was not so specified, distributed to other programs and tended for routine activites.