The LMS system needs 'tweaking' to make it more open and flexible, AMA education officer Alan Parker said. Key issues were balances and relationships with governors.
'Excessive school balances are public money, and if schools don't spend it they are going against democratic principles as well as cheating their current pupils,' he said.
Partnership, quality and accountability reassures schools which have good reasons for keeping big balances, such as anticipation of high spending or reservation of funds for specific purposes.
The report also suggests a shake up of roles for school governors and local education authorities.
'At the moment the role of governors in schools is 99% not a problem, but when there are problems it's impossible for anyone else to help.
'When there's a duff head teacher, for example, and the governors can't do anything about it, then a school can go downhill very rapidly,' said Mr Parker.
'The main way to improve that is by having a more constructive relationship between leas and governors in the first place so that governors don't see authorities as interfering bodies to be kept at arms length.
'Then there is a series of stages beyond that. There should be a right of leas to issue warnings to governors and if they don't respond, authorities should be able to appoint two or three governors and then eventually, as now, the school could be taken over.'
The report includes blueprints for a 'regime of support' for schools, saying that local education authorities should maintain direct links with all governing bodies, encouraging them to participate with local governors association forums and should provide appropriate training and support for governing bodies.
AMA education committee chair Graham Lane said that although local management of schools is popular with everyone, it alone does not deliver better standards in schools.
'Under the present system schools are treated as though they are either perfect or total write offs. There has to be a better way of doing things than that.
'Our report sets out a better way. Under our blueprint the stakeholders in education - parents, staff, governors, leas - would supplement national quality criteria with quality targets and programmes for each school.'
Partnership, quality and accountability is available priced £8 from LGMB Publications, Arndale House, Arndale Centre, Luton LU1 2TS.
- The government is inviting views on proposals to allow grant-maintained schools to borrow commercially and keep the full proceeds of property disposals.
Under other proposals, also out for consultation, grant- maintained schools will be allowed to retain all the proceeds from the disposal of surplus school premises from April next year.