The impetus for North Carolina's Senate Bill 2, the 1989 Flexibility and Accountability Statute, came partly out of the philosophy that restructuring should reach up from the school and not down from the state. The statute offers local school systems the flexibility to develop local plans to improve student achievement through waivers of certain state regulations and funding restrictions, additional pay plan funding, and the establishment of local goals. Participation in the performance-based accountability provisions of the statute is optional but participating in the state's new accreditation program is mandatory. Local school unit plans should be created by school-based planning committees that may be effective in staff development, needs assessment, and action planning. The legislation also calls for an annual report card that assesses state and local student performance improvements. Comments about school improvement, guidelines for participation, questions and answers about the statute, and the text of the bill are provided. (EJS)