The 1988 School Reform Act (Illinois PA 85-1418) mandated that Chicago's public schools be managed locally by school-based management councils. Principals in Chicago public schools work with their local school councils (LSCs) to effect plans concerning school management, budgeting, school improvement, staffing, and curricular concerns. This report presents findings of a study that investigated Chicago principals' and school councils' perceptions of the principalship under school reform. Data were derived from two surveys, one of the principal and one of the LSC chairperson of each school. A total of 319 principals from elementary and high schools responded. Because the chairperson response was low, only the findings of the principal survey are presented. Interviews were also conducted with the principal and LSC chair at each of 25 schools. The surveys examined principals' perceptions of their roles in the following areas--administration, instructional leadership, school personnel selection, budget, school improvement plan, and leadership. Conclusions are: (1) principals' roles and responsibilities have been greatly expanded, but their degree of instructional involvement has been reduced; (2) most principals share decision-making with their LSCs, including preparation of the school budget; and (3) principals perceive their leadership role as collaborative. However, principals need help in identifying resources and in receiving training and support. Nine recommendations are offered. Twenty-two tables and an appendix containing the surveys are included. Contains 30 references. (LMI)