The allocation to each school is determined by a formula that takes into account the number and type of students at that school. Often the district is responsible for purchasing and warehousing supplies and equipment specified by the schools. Each school determines how to spend the lump sum allocated by the district. Funds can be spent on personnel, equipment, supplies, and maintenance. The school's instructional and administrative priorities are expressed through its budget priorities.
Most districts create school-based management councils at the school sites.
The council conducts a needs assessment and then develops a plan of action that includes statements of goals and measurable objectives. In other districts, the council advises the principal, who then makes the decisions. From the beginning, the school board and superintendent must be supportive of school-based management. They must trust the principals and councils to determine how to implement the district's goals at the individual schools. It is important to have a memorandum of agreement that specifies the roles and responsibilities of the school board, superintendent, principal, and SBM council.