In order to strengthening the system of water conservancy administrative powers in relation to expenditure responsibilities in China, to improve the efficiency of water conservancy funds and to promote the development of water conservancy, the existing problems in the current division of water conservancy administrative powers and expenditure responsibilities are discussed through the field investigations of many reservoirs, water locks, dykes and irrigation ditches mainly in Hunan Province. Then the causes are analyzed by using the polycentric governance theory, fiscal federalism theory and bureaucracy theory. The results show that the society and individuals excessively depend on the government in the regulation of water conservancy. The division of water conservancy administrative powers between higher and lower levels is unreasonable. The inter-boundary conflicts are hard to be solved. The division of water conservancy administrative powers among different government departments is overlapped, and there is coexistence of multiple departments in regulating water conservancy. The scale of special funds is large, and the fiscal fragmentation is serious. The main causes are as follows: the social and individual autonomy is not strong, and their self organizing ability is weak. The participation system in water conservancy is not perfect. The division of water conservancy administrative powers between higher and lower levels exhibits obvious administrative powers, same responsibilities and unfavorable gaming positions. The responsibility boundaries among different governmental departments are vague. The sector interests are fixed. Based on the above mentioned, a series of policy measures for reform of the division of the water conservancy administrative powers and expenditure responsibilities are put forward so as to form the equilibrium administrative mode for stakeholders with the government being the subject.