Purpose: The purpose of this paper is to examine the current school-based management (SBM) policy reform in Indonesia, with an emphasis on the impacts of shifting authority and responsibility to school level, as well as challenges confronted by the school council members, followed by remedial measures to minimize the problems. Design/methodology/approach: The paper employed a mixed-method research design comprising an extensive empirical survey followed by semi-structured and focused group interviews and examination of relevant documents. The data reported here are on the basis of an empirical survey involving 504 school council members from Ngada-Flores, followed by 42 interviews and focus group discussion (FGD) with all relevant stakeholders. Findings: The research findings demonstrate how devolution of power and authority to school level can create partnership in participatory school decision making in terms of setting a school mission, shared-vision, annual programs, school budget, school textbooks, school buildings, school-based curriculum and even students' discipline policies. In turn, devolving power and authority to school level has created several changes in schools, including in-school culture changes, and increased participation of school communities. These factors have led to the improvements in teaching-learning environments and student achievements. Research limitations/implications: The findings of this study are specific to the context of Ngada-Flores, Indonesia. The possibility for the general applicability of the findings is limited by the scope, the sample, and the cultural context of this study. Accordingly, even though there could be common features, the findings may not have general applicability to other systems. Practical implications: The paper suggests that capacity building in school level is required for the effective implementation of SBM policies and programs, including in-service training, regular professional development sessions a workshops on effective school leadership and management, as well as school development planning. Originality/value: This paper could be significant because of the absence of similar studies in the Indonesian context. The findings could be helpful in informing practitioners, the local and national authorities and all those interested in school education on how SBM with devolution of power and authority to school-level decision makers assists in-school improvements and student achievements, as well as problems and challenges confronted by school leaders in the implementation of SBM. (Contains 17 tables and 7 figures.)