During the 1980s, under agreements between the Ministry of Social Welfare, the Ministry of Health, and the State Secretariats of Health, integrated health actions were instituted in Brazil, through which funds from Social Welfare were transferred to the state and municipal health systems. In order for these systems to be able to function independently of the central government, financial and decision-making policies will have to be restructured to permit true decentralization at local levels, through the distribution of resources in accordance with criteria specified by the author in this paper. This will require both redefinition of financing mechanisms and reformulation of the budgetary process.