The city school system could look a lot more like a private corporation by next year.

A major overhaul proposed by Mayor Bloomberg this week will turn principals into the “CEOs” of their schools, convert regional superintendents into “entrepreneurs,” and set schools to compete with one another for students — and the funding that follows them — under a new per-pupil expenditure formula.

“Schools have traditionally not felt that they had to work for the students,” Mr. Bloomberg said yesterday at a Columbia University conference following his announcement this week of the biggest changes since he took over the school system. “Very seldom are they being held to the standard of having to provide a good service or losing their job, which is exactly what most people who work in the private sector face every single day.”

At the heart of the mayor’s initiative is an accountability system for principals that would put them in charge of their school budgets, give them more authority over staff and curriculum decisions, and allow them to shop for services among competing vendors — much like the managers of branch offices or franchises in a large company. In exchange, if they failed to improve student achievement as measured primarily by test scores, they would lose their jobs. The same would be true of teachers seeking tenure who don’t perform well in their first three years.

“Successful businesses tailor their businesses to what their customers need. Government has never done that; and we’re trying to do that and I can’t think of any place more important to do it than in education,” Mr. Bloomberg said.

The schools chancellor, Joel Klein, has consistently batted away rumors that the administration has a plan to privatize the management of public schools. He also denied yesterday that the overhaul would transform the school system into a replica of a private corporation.

“These are public schools,” he said, but added: “If you’re saying that I’m bringing in principles that organizations that succeed use, the answer is yes.”

In a speech to business leaders yesterday, Mr. Klein criticized the view “that education is different” and “that the enterprise of teaching is not amenable to financial rewards.” In naming the appointees that will lead the four super regions replacing the current structure of 10 regions — Kathleen Cashin, Judy Chin, Marcia Lyles, and Laura Rodriguez, all current regional superintendents — he said they would be entering roles where they would have to act as “entrepreneurs.”

The president of the Partnership for New York City, a group of business leaders, Kathryn Wylde, said the changes had only a limited relationship to a corporate model.

“I would say they’re trying to take some best practices from the business community, and the most important one is investing in their line managers,” she said, referring to principals.

The co-director of the National Center for Restructuring Education, Schools, and Teaching, Jacqueline Ancess, said she saw a much deeper imprint of the business world in the initiative — and warned it could be harmful to student learning.

“What does the mayor know? He knows how to establish a good corporation,” she said. “They don’t really respect educators … but the only people who know about teaching and learning are the educators, and so there’s no emphasis on teaching and learning anymore.”