This article assesses the impact of the decentralization process on multi-level governance in Indonesia by focusing on the functional assignment of roles and responsibilities among central, provincial and district/city governments. The case of functional assignment in the health and education sectors is used to analyse the decentralization effects of recent legal reforms and is evaluated using the managerial grid model. The research finds that despite recent reforms aimed at deconcentration, central government remains the dominant actor in the system of governance and the delivery of public services. Although in general local governments are allocated a large range of functions, they are not accompanied by sufficient budget allocation. It is observed that functional assignment delegated to local governments vary and should depend on the capacity of each region. To conclude there is a need to establish an independent institution that is responsible for functional assignment to regions in accordance with their respective capacity.