There are two parts in this study. One is the design of an ideal school finance structure and the other is teacher appointment process of school-based management (SBM) schools. This study uses literature review, survey and group interview to collect data. We recommended that principal at SBM's school should have power to appoint teachers. For check and balance, we also recommend that the appointment of principal should be the responsibility of principal selection committee, composed of representatives of teachers and parents. For financial system, we recommend that the design of any SBM's financial structure should relate to educational considerations and students outcomes. We then design a needs-based formula for Hualien's schools.