Government funds it because it wants the minority votes. Dont be blind. Everyone knows it. AMU was the one who supported Jinnah in creation of Pakistan.
Apart from this, if you talk of madarassas, we would wish that they would impart only education and nothing else. But sadly, they have also been haven for terrorists and imparting of hardline and fundamentalist views. Accept it.
Now non-muslims' problem arises because fundamentalist education is being imparted which is a threat to any civilized society. It would do well for muslims to attend "normal" schools rather than madarassas.