This paper draws upon the findings of two years of research in five English primary schools as they implemented Local Management of Schools (LMS). Heads and governors of schools are urged to adopt rational planning techniques in managing their budgets. Using examples relating to the employment and remuneration of teachers the decision-making processes in the schools are considered using an ambiguity perspective which reveals how heads and governors arrive at staffing decisions which are based on a rationality which is bounded and informed by circumstances. Rational planning techniques are then used to legitimate the decision.