This paper discusses the recent implementation in England of school improvement reforms based on school choice and in particular on a system of school-based management whereby total financial control is vested in individual schools. The first section briefly describes the financial structure of the English educational system, followed by an examination of the historical development of site-based management. The central government's progress toward implementing the 1988 Education Reform Act is then outlined. The local management of schools initiative (LMS) introduces five related factors: formula funding, delegated finance, staffing delegation, open enrollment, and performance indicators. Advantages of LMS include the ability to meet local needs, quick response time, and capacity for multiyear planning. Constraints include time, sophisticated management information systems, and training needs. A conclusion is that the educational system has changed from local education agency (LEA) control over input and school autonomy in outputs to a system in which schools control input and resources, and a centrally determined curriculum and performance indicators prescribe the process and output. Thus, the schools will be forced by the market to improve performance, creating a direct relationship between the quality of education and employment. As a market mechanism, LMS strategy provides the best needs assessment and market-determined rewards and sanctions. Three figures are included. (39 references) (LMI)