When policymakers begin to think of ways to help schools improve, they often settle on the idea of giving individual schools greater independence. This led to the "site-based management" movement of the 1990s. Today, granting schools autonomy from some or all rules remains a popular strategy for reform. With expanded autonomy, districts let the schools themselves--the principals and the teachers--make big decisions like how to spend the budget, what curriculum to use, and how to hire and train teachers. Those who know students best, the theory goes, are best able to direct the resources and take the actions that most benefit them. Experience with charter schooling and other autonomous school reforms has shown that granting schools more flexibility can yield more innovation in school management, staffing, and instruction, bringing examples of success to neighborhoods where high-performing schools are rare. But experience has also shown that not all schools have the capacity to fill the space created by autonomy with actions that actually improve student learning. In this report the author takes a closer look at the theory behind the autonomy movement. The author also looks at how the District of Columbia and other school districts are translating this theory into practice. This report explores what tools schools need and how some districts are helping develop capacity. It also looks at "portfolio management," now being implemented in Chicago, New York City, New Orleans, and others. A glossary is included. (Contains 3 figures and 50 notes.)