The aim of school councils in New South Wales (Australia) is to ensure that the whole community is involved in all important decisions made by the school. The impetus for school councils began in 1990, and in 1995 the Department of School Education placed their formation on its priority agenda in response to their slow rate of establishment. Two possible scenarios for their functioning have been suggested. In the compliance orientation, school councils are regarded as a political policy fad and their creation is seen as an end in itself. In the capacity-building orientation, school councils become the means for creating a stronger partnership between parents, teachers, and the community to improve the quality of education. A study examined 96 school council members' perceptions of the functioning of school councils in 18 small, rural schools in the Riverina region of New South Wales. Council members expressed displeasure over councils being taken over by outside special interest groups. Respondents were interested in developing many policies but were less certain they should be involved in curriculum development. Most council members saw their advisory roles as being involved with school administration and distributing decision-making power among the community. Members criticized cutbacks in funding to education. In many schools the compliance orientation seemed to be the modus operandi, but some promising signs were expressed by individual members who were working toward the capacity-building orientation. (TD)