The Alabama Education Study Commission conducted a five-year project to find adequate measures of accountability for schools. The result, developed, implemented, and tested in 11 school districts in Alabama, was a Program Management and Budgeting (PMB) system combining elements of zero-base budgeting and management by objectives. PMB has the capability to identify program resources, set program objectives, measure program effectiveness, and provide the public with accurate and timely information about their schools. Two major problems discovered in similar systems developed in other states were overcome. Identifying program structure accurately before developing the chart of accounts solved the first, while the management tool aspect of PMB resolved the second, lack of communication between fiscal and program personnel. Direct benefits of the PMB system included improved efficiency and effectiveness through greater control and more informed decision-making. Citizen participation and public credibility and trust also increased. The refusal of the Alabama Department of Education to permit fiscal reporting in a program budgeting format needs to be reversed and all school systems in the state need to use PMB if the new system is to bear full fruit. A formal pilot program evaluation is provided as an appendix. (Author/PGD)