A few years into his 12-year tenure as principal of Foshay Learning Center in South Central Los Angeles, Lapin and his staff found they had a budget surplus. They also recognized that the school's sixth-grade reading-test scores were sub-par.

Lappin had somewhat more control over his school budget than other Los Angeles Unified School District principals, so he and his staff decided to use the surplus on professional development and hired teacher coaches for the sixth-grade instructors.

"Our test scores went up," he says. "That was a successful use of money, and it was a decision made at the school level."

Ouchi's ideas about greater site control also appear to be gaining traction with state education leaders. As the one-time chief of staff to former Los Angeles mayor and current California Education Secretary Richard Riordan, Ouchi is a key member of Riordan's education advisory panel.

Riordan, in fact, has publicly embraced Ouchi's theses. In February, he announced his intent to advance a statewide measure that would vastly expand principals' powers over their budgets and staffing while also streamlining the state's education-financing system so that money follows students to schools rather than being allocated by central districts.

The education secretary cites Ouchi's research into site-based budgeting as a significant influence on this thinking. "The whole school-finance system needs to be revamped so that the authority and control is at the local level, under the leadership of the principal," says Riordan. "Leadership is the way you turn schools around."

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