State Assessments Required by the No Child Left Behind Act: An Analysis of Requirements, Funding, and Cost
Released: 2011-03-03T00:00:00

Introduction

The Title I-A program of the Elementary and Secondary Education Act (ESEA), as amended by the No Child Left Behind Act (NCLB; P.L. 107-110 ), is the largest source of federal funding for elementary and secondary education. States that receive Title I-A funding must comply with certain requirements related to measuring and evaluating student achievement. Specifically, states are required to develop academic standards and assessments and use the results of these assessments within an accountability system that determines whether schools and local educational agencies (LEAs) are making adequate gains in student achievement.

Provisions regarding state standards and assessment systems were in place prior to the NCLB; they were enacted through the Improving America's Schools Act of 1994 (IASA; P.L. 103-382 ), which amended the ESEA. The IASA required states to adopt standards and assessments in the subjects of reading/language arts (hereafter referred to as reading) and mathematics at three grade levels: at least once in each of the grade ranges of 3-5, 6-9, and 10-12. Under the IASA, states were required to develop or adopt academic content standards, as well as content and performance standards and assessments tied to the content standards. The full system of standards and assessment was required to be in place by the 2000-2001 school year.

The standards and assessment provisions within the NCLB expanded upon provisions initially adopted in the IASA by increasing the number of grades and content areas that states are required to assess. Under the NCLB, states are required to assess students in grades 3 through 8 and one grade in high school in the content areas of reading and mathematics; states were required to administer these assessments by school year 2005-2006. In addition, states are required to assess students once in each of three grade bands (3-5, 6-8, and 10-12) in science; states were required to administer these assessments by school year 2007-2008.

To help states pay the costs of meeting the expanded Title I-A requirements regarding standards and assessments, the NCLB authorized a new annual Grants for State Assessments program (Section 6111). The Grants for State Assessments program is a formula grant program that is intended to pay the costs of the development of the required assessments and, if assessments are fully developed, to help pay the costs of administering the assessments. In addition, the NCLB authorized a new annual Grants for Enhanced Assessment Instruments (Section 6112). The Grants for Enhanced Assessment Instruments program is a competitive grant program that is intended to enable states to improve the quality, validity, and reliability of their assessments beyond the requirements of Title I-A.

It is clear that state assessment expenditures have grown dramatically since the adoption of the NCLB. The extent to which these newly authorized grant programs have assisted states in meeting the assessment requirements of the NCLB is unclear. That is, it is unclear how much the federal grant programs are contributing to the overall cost of assessment activities under Title I-A of the NCLB. The primary purpose of this report is to explore issues related to the cost of assessments and to provide an understanding of the factors that influence the overall cost of assessment systems. This information is supplied to Congress as it prepares for the reauthorization of the ESEA and for deliberations on the ESEA standards and assessment provisions.

As Congress considers the reauthorization of the ESEA, it is likely that the standards and assessment provisions within Title I-A will be reviewed and debated. State assessments are currently the primary policy tool used to measure whether schools, LEAs, and states are meeting certain academic targets. As such, the effectiveness of federal policy is dependent upon a valid state assessment system. Designing an assessment system requires states to consider certain tradeoffs in order to meet the requirements of the NCLB while meeting state requirements and containing costs. Decisions made in the design of a state assessment system have direct implications for the validity of the NCLB accountability system and direct consequences for schools.

This report aims to shed light on the current status of state assessment systems under the NCLB and it provides analysis that allows policymakers to explore some of the potential implications of changing the requirements of state assessment systems. The first section explicitly details the current assessment requirements of the NCLB and provides an overview of the current status of state assessment systems. The second section describes the assessment industry and how it responded to meet the expanded assessment requirements adopted in the NCLB. The third section provides a discussion of factors that influence the overall cost of student assessment within state assessment systems, which include assessment development, scoring and administration, policy choices, and implementation practices. The final sections report data on the cost of current assessment systems under the NCLB and explore some of the policies that may promote efficiency.

Assessment Requirements of the NCLB

Section 1111(b) outlines the state assessment requirements of the NCLB. Additional requirements for the assessment of students with disabilities are outlined in regulations. The general assessment requirements for all students and alternate assessment requirements for students with disabilities are discussed below. Following a discussion of the requirements is a summary of the current status of state assessment systems.

General Assessment Requirements

In general, each state is required to administer a set of high-quality, yearly academic assessments in mathematics, reading, and science. Results of these assessments are used to determine whether the state and each of its local educational agencies (LEAs) are assisting all students in meeting the achievement standards established by the state. In practice, the results of state assessments are used to determine whether schools and LEAs have made adequate yearly progress (AYP). In addition, ESEA statutory provisions, as amended by the NCLB, specify that state assessments shall

be used to measure the achievement of all students; be aligned with the state's academic content and performance standards, and provide coherent information about student attainment of such standards; be used for purposes for which such assessments are valid and reliable, and be consistent with relevant, nationally recognized professional technical standards; be used only if the state educational agency (SEA) provides to the Secretary of Education (hereafter referred to as the Secretary) evidence from the test publisher or other relevant sources that the assessments used are of adequate technical quality for each purpose required by the ESEA; measure the proficiency in mathematics, reading or language arts, and science for grades 3 through 8 and one grade in high school; involve multiple up-to-date measures of student academic achievement, including measures that assess higher-order thinking skills and understanding; provide for "reasonable" adaptations and accommodations for students with disabilities; provide for the inclusion of limited English proficient students, who shall be assessed, "to the extent practicable," with assessments in the language that is most likely to yield accurate data on achievement; include students who have attended schools in an LEA for a full academic year; produce individual student reports that allow parents, teachers, and principals to understand the academic needs of the students, and include information regarding achievement aligned with state academic content standards in an understandable format as soon as is practicably possible; enable results to be disaggregated within each state, LEA, and school by gender, race/ethnicity, English language learner (ELL) status, migrant status, students with disabilities as compared to nondisabled students, and economically disadvantaged students as compared to students who are not economically disadvantaged; be consistent with accepted professional testing standards; objectively measure academic achievement, knowledge, and skills; and not evaluate or assess personal or family beliefs and attitudes or publicly disclose personally identifiable information; and enable itemized score analyses to be produced and reported to LEAs and schools so that parents, teachers, principals, and administrators can interpret and address the specific academic needs of students as indicated by the students' achievement on assessment items.

Alternate Assessment Requirements for Students with Disabilities

In addition to the requirements above, states are required to develop at least one alternate assessment for students with disabilities. The requirement that states develop at least one alternate assessment was intended to ensure that all students with disabilities could participate in state assessment and accountability systems, which is required by both the NCLB and the Individuals with Disabilities Education Act (IDEA; P.L. 108-446 ). By the end of the 2005-2006 school year, all states had included at least one alternate assessment within their state assessment system.

There are currently five options for assessing students with disabilities for state accountability purposes: (1) general state assessment, (2) general state assessment with accommodations, (3) alternate assessment based on grade-level standards, (4) alternate assessment based on alternate achievement standards (AA-AAS), and (5) alternate assessment based on modified achievement standards (AA-MAS). The first three assessment options result in scores that may be counted in AYP calculations in the typical manner, as determined by a state's accountability system. Scores from the fourth and fifth assessment options (AA-AAS and AA-MAS) have restrictions on the way they may be counted in AYP calculations. These restrictions are outlined in regulations issued by ED and have numerous implications for state accountability systems.

Current Status of State Assessment Systems

States have had varying degrees of success in developing state assessment systems that meet the expanded NCLB assessment requirements above. Although these requirements have been in place since the NCLB was enacted in 2002, 11 states have never received approval of their state assessment systems from the U.S. Department of Education (ED). As of January 2009, 39 states have received full approval for their reading and mathematics assessments, and 12 states are listed as "approval pending." In 11 of the 12 states, alternate assessment for students with disabilities was a factor preventing approval of the assessment system. For science assessments, 10 states have received full approval.

The Assessment Industry

With the adoption of the NCLB, there was a dramatic change in the demand for new assessments, which required the assessment industry to increase its production of assessment products. States began to require the assessment industry to develop new types of assessments that were reliable and valid for the purposes of their state accountability system. This section explores changes in the number and type of assessments that states required and how the industry and states have responded to these changes.

The assessment industry is a collection of private companies that develop, administer, and score assessments for a variety of purposes. Some companies in the assessment industry, also called "assessment vendors," specialize in professional certifications, such as teacher certification or career and technical certifications. Others specialize in entry examinations for undergraduate or graduate programs. A subset of assessment vendors specialize in educational assessment for students in elementary and secondary schools.

The assessment requirements of the last two reauthorizations of the ESEA (i.e., the IASA and the NCLB) have greatly increased the demand for assessment development and administration services in elementary and secondary schools. Prior to the IASA, decisions regarding student assessment were largely made at the school or LEA level. Schools and LEAs typically purchased readily available, nationally normed tests of achievement, such as the Iowa Test of Basic Skills (ITBS) or the Stanford Achievement Test. Assessment vendors referred to these sales as "catalogue sales," and the vendors could control development and administration costs fairly easily by using the same test for a number of years and across a number of LEAs.

The requirements of the IASA and the NCLB changed a fundamental element of assessment in elementary and secondary education—they required states to develop state academic content and performance standards and align state assessments to the state content and performance standards . This requirement in legislation caused a shift from the administration of norm-referenced assessments to the administration of criterion-referenced assessments that were aligned with state content and performance standards. Moreover, this requirement no longer allowed states, LEAs, or schools to purchase assessments through "catalogue sales" because these assessments would not necessarily be aligned to the state content and performance standards.

The assessment requirements of the NCLB created a new market and increased demand for elementary and secondary assessments. Specifically, because of the requirement that assessments be aligned with content and performance standards, the assessment industry was tasked by states to create new, customized criterion-referenced assessments that measured each state's unique content and performance standards. The relatively sudden demand for 52 new assessments created competition among assessment vendors to vie for state assessment contracts; in some cases, these state assessment contracts are worth hundreds of millions of dollars.

Although there is competition for state assessment contracts, there are a limited number of assessment vendors who develop the types of assessments required by the NCLB. It has been reported that five assessment vendors account for over 90% of the statewide testing revenue. There are several smaller, full-service assessment vendors and other niche companies that compete for state contracts as well.

Estimated Costs for State Assessments

In a conference report accompanying the passage of the NCLB, Congress required the Government Accountability Office (GAO) to conduct a study of the aggregate costs to develop and administer new state assessments between FY2002 and FY2008. GAO estimated that the aggregate costs of new state assessments would be between $1.9 billion and $5.3 billion, depending on the design of the assessments; this estimate represented the total cost to all states from FY2002 to FY2008. The low estimate of $1.9 billion assumed that states would choose to develop only multiple-choice items that would be scored by machine. A mid-level estimate of $3.9 billion assumed that states would maintain their current combination of multiple-choice and limited open-ended items as reported to GAO. The high estimate of $5.3 billion assumed that states would use a combination of multiple-choice and open-ended items that require students to write their response, such as an essay, which would require human scoring.

Since the passage of the NCLB, several nationwide estimates of expenditures on state assessments have been put forth. For school year 2005-2006, one estimate places nationwide assessment expenditures for NCLB-required state assessments at between $500 million and $750 million. A more recent estimate places nationwide expenditures at approximately $900 million per year. Although the assumption that states would maintain their pre-NCLB combination of multiple-choice and limited open-ended items has not been investigated, recent estimates of expenditures suggest that the original GAO estimates were low.

New Challenges for the Assessment Industry and States

The assessment industry and states faced new challenges in implementing the assessment requirements of the NCLB. One observer noted that "the massive expansion of required testing fell onto the relatively small testing industry like a log landing on a twig." Although there was at least one report asserting that the assessment industry was prepared to meet the new demand, the media often reported that assessment vendors faced difficulties in increasing staff capacity to handle the workload. Some have reported that the assessment industry is "stretched thin" and that vendors are "competing against each other for the same people." One particular area of concern is a reported shortage of measurement experts, or psychometricians, to assess the reliability and validity of assessments. It has been estimated that between 1995 and 2003, under a dozen doctoral degrees were awarded to psychometricians each year; an additional 35 doctoral degrees were granted annually in the fields of statistics, testing, and educational measurement. The educational assessment industry must compete with other industries for a limited number of psychometricians, leading to the phenomenon of "psychometrician musical chairs."

There is some evidence that the assessment industry was not prepared to meet the new demand created by the NCLB. Numerous errors in printing, administering, and scoring assessments have been reported. In some cases, assessment results were delayed by several months. A survey of 23 states found that 35% of states experienced significant errors with scoring, and 20% of states reported delays in receiving assessment scores. States have penalized some assessment vendors for the errors and delays through fines or contract termination.

States have also faced challenges in implementing the new assessment requirements of the NCLB. State assessment offices were charged with administering competitions for new assessment contracts, which often required an "enormous vetting process," including reviewing proposals and presentations from vendors. The proposals often must be vetted by a panel of teachers, school district testing directors, data management specialists, and other interested stakeholders. Some states have hired new staff members to manage the workload; however, new state employees are "on a learning curve in terms of figuring out how to collect the data, clean it, and turn around and report it back." A survey of state testing directors found that over half of the states have problems recruiting and retaining key staff needed to respond to administering the NCLB. Reportedly, there is also a high turnover rate among testing directors, many of whom have left state jobs to pursue opportunities in the private sector.

Even when states have the necessary capacity to oversee assessment contracts, some states have reported that it is difficult to remedy situations in which vendors have caused extensive delays or made repeated errors. Other than the threat of financial penalties, the states report that they have little leverage to cancel or modify contracts because if the contracts were re-competed, "the same companies would bid." To this end, one testing expert noted that the assessment industry is "not a monopoly, but it is an oligopoly, with very little regulation."

Factors that Influence the Cost of State Assessment Systems

There is insufficient research on factors that influence the cost of assessments required by the NCLB to construct a complete model of overall cost. Much of the research on cost predates the NCLB, and it may not provide accurate depictions of assessment practices today. In lieu of existing information regarding cost, this section of the report presents a framework to guide discussion about the factors that influence the cost of student assessment. It focuses on assessment development, scoring, policy choices, and implementation practices. After these components of state assessment systems are introduced, the research that exists on costs associated with these components is discussed. This is followed by an original analysis which, within limitations imposed by available data, tests the assumption that student population is a major factor affecting cost.

Table 1 provides a cost structure that outlines low, mid-level, and high estimates for various assessment components. For example, development accounts for approximately 18% to 25% of the total assessment cost, depending on a state's relative level of investment in this activity. This cost structure can be used to assist states in balancing their assessment budget; it is designed to help states understand the tradeoffs involved in creating an assessment system. At the mid-level, all of the components sum to 100%. If, however, a state chooses to spend a "high" proportion of the assessment budget on development (moving from 22% to 25%), it would need to off-set that expense by choosing to spend a "low" proportion of the budget on a component like production and manufacturing. Any combination that sums to 100% would represent a balanced assessment budget.

Across the low, mid-level, and high estimates, development is the most expensive assessment component, accounting for 18% to 25% of total assessment cost. The least expensive assessment component in the cost structure is reporting, accounting for 2% to 5% of the total assessment cost. All other components are relatively equal in terms of their proportional cost, ranging anywhere from 12% to 20% of the total assessment cost.

Some of the components in this cost structure are relatively fixed costs that would be similar regardless of the type of assessment used (e.g., reporting); however, other components are assessment design elements over which states can exert some control (e.g., development; document preparation, scanning, editing, multiple choice scoring; open-ended scoring). The sections below discuss two of the major design elements that can influence costs: assessment development and scoring. The final section discusses various policy choices and implementation practices that can also influence costs.

Assessment Development

Assessment development is an ongoing process. Test developers often convene to create a new set of assessment items based on academic content and performance standards used in the state. Once created, the items are field-tested to allow test developers and psychometricians to investigate the reliability and validity of the assessment. If certain items prove to be unreliable or invalid, they are removed. Once problematic items are removed, the remaining items are sometimes reviewed by committees to check for potential bias against certain student groups. At this point, the assessment may be administered to students for the purpose of accountability. Once administered for the purpose of accountability, it is common practice for the state to release some of the assessment items to the public. This practice is used to build credibility and create buy-in to the overall assessment and accountability system of the state. The items that are released to the public must be replaced annually.

The cost of assessment development is primarily dependent on the number of assessments to be developed and the types of assessment to be developed. The number of assessments developed by states to fulfill the requirements of the NCLB is, at minimum, 17. The 17 assessments include reading assessments for grades 3 through 8 and one grade in high school, mathematics assessments for grades 3 through 8 and one grade in high school, and science assessments for three grade levels.

The most common types of assessment used by states to fulfill the requirements of the NCLB are (1) multiple choice assessments, or (2) multiple choice assessments with constructed response. Multiple choice items require students to choose the correct answer from a selection of responses; constructed response items require students to generate a written response. Since 2002, states have generally reported increasing the use of multiple choice items and decreasing the use of constructed response items.

The cost of developing a single multiple choice item has been estimated to be between $300 to $1,000. State assessments typically include 50 to 100 items per subject (i.e., reading, mathematics, science) per grade. Using these parameters, a conservative estimate for assessment development, therefore, would be around $255,000. It is possible, however, that assessment development could be as high as $1.7 million. These estimates do not include assessment development costs associated with any constructed response items. Furthermore, they do not include the ongoing costs of developing new items each year to replace those items that were released to the public. Therefore, estimates presented herein may underestimate the total cost of development.

Scoring

Scoring assessments includes both automated scoring and human scoring. Automated scoring by machine is used for multiple choice items and some constructed response items. Human scoring is used for constructed response items that require judgment regarding the correctness or quality of the response. Typically, human scoring is conducted by staff hired by the assessment vendor that is administering the assessment.

Automated scoring is relatively fast and efficient, and human scoring is relatively slow and laborious. Human scoring requires extensive training and oversight of scorers in order to ensure a basic standard of accuracy and reliability. For example, it is common for scorers to participate in one or more training sessions in order to establish a reliability with the scoring procedures and other scorers in the group. Next, assessments are distributed for scoring. Most times, a certain percentage of assessments are sent to more than one scorer for "double scoring," sometimes called a "read behind." The read-behind procedure allows an assessment vendor to determine whether the reliability between the scorers is high enough to ensure the accuracy and validity of the results.

Since most states use multiple choice assessments to meet the assessment requirements of the NCLB, the majority of the scoring is automated. The speed and ease of automated scoring may actually be a strong incentive for states to use multiple choice assessments. States face a certain time pressure to report results quickly and accurately. NCLB regulations require states to report the results of state assessments before the beginning of the next school year. Generally, states would prefer to conduct assessments as late in the school year as possible to reflect the achievement level of students after a year of instruction. If assessments are administered in late spring and results are needed by mid-summer, states may only be afforded a window of several weeks to score assessments.

Some states have expressed interest in using more constructed response items in their state assessment systems under the NCLB. One reason states may choose to use multiple choice items over constructed response items is the associated scoring costs. In 2003, GAO reported data on the relative costs of scoring an assessment that primarily used multiple choice items versus an assessment that used multiple choice and constructed response. In the states of North Carolina and Virginia, assessments primarily consist of multiple choice items; in these states, scoring costs less than $1 per assessment. Massachusetts, on the other hand, uses an assessment with both multiple choice and constructed response items; scoring costs approximately $7 per assessment.

Another reason states choose multiple choice over constructed response items is the extended timeline required by human scoring. The current window to score assessments (i.e., several weeks) may not allow for large-scale assessment programs with human scoring. Given this short turnaround time, states may opt for speed, accuracy, and cost effectiveness over the potential benefits of constructed response items that require human scoring.

Policy Choices and Implementation Practices

Federal and state policies set the requirements for state assessments and influence the design of the overall assessment system. As discussed, the number of assessments required by federal policy can influence the cost of assessments. Additional state policies can increase the cost of the assessment system as well. In addition to the assessment requirements of the NCLB, states sometimes require assessments in additional grades or subject areas. Furthermore, some state policies require developing multiple versions of each assessment to reduce the likelihood of cheating or for use in cases of student absence. For example, GAO reported in 2003 that Massachusetts used 24 different versions for many of its assessments and spent approximately $200,000 to develop each assessment. By contrast, Texas used one version of its assessment and spent approximately $60,000 to develop each assessment.

State policies also vary with respect to releasing items to the public. GAO reported that 54% of states release items to the public; however, the number of items released each year is highly variable. Texas, Massachusetts, Maine, and Ohio released the entire assessment to the public to allow parents and other stakeholders to see every test item administered to students. New Jersey and Michigan reported releasing only a portion of their assessments. Some states, such as North Carolina, reported releasing items to teachers but not the public. Due to the variability in the number of items released each year, states face different replacement rates for assessment items. States that release the entire assessment annually must redevelop the assessment annually. States that release only a portion of the assessment have fewer items to redevelop annually. Even states that do not release items to the public replace some items each year for the purpose of test security. State policies regarding the number of items released to the public have direct consequences on the development costs in a state assessment system.

Another state policy that influences the cost of an assessment system is participation in a state consortium. Currently, there is one consortium of states that works to develop, maintain, and administer assessments that fulfill the requirements of the NCLB. The New England Common Assessment Program (NECAP) is a collaborative endeavor that includes Maine, New Hampshire, Vermont, and Rhode Island. Maine was the most recent state to join the consortium, and state officials have reported saving $1 million per year on state assessments as part of the NECAP consortium.

State Expenditures on Assessment Systems Under the NCLB

The previous section explored the cost structure of state assessments and how some of the factors of a state assessment system influence cost. The current section turns to a discussion of how states report spending money on state assessment systems required by the NCLB.

There are relatively little data available that reflect state expenditures on their state assessment activities required by the NCLB. One reason for the lack of data is the difficulty in accounting for assessment expenses across multiple, and sometimes overlapping, activities. For example, states typically use assessment vendors to develop, administer, and score assessments. These vendors, however, may perform other duties that are not directly related to assessment (such as developing or maintaining standards) or perform other assessment duties that are not directly related to assessments required by the NCLB (such as developing end-of-course assessments or developing assessments for additional grades or content areas that are required by the state but not the NCLB). In cases where assessment vendors conduct additional work within one contract, it is difficult for states to separately account for expenses directly related to assessment activities required by the NCLB.

In addition to awarding contracts to assessment vendors, states also employ state- and local-level assessment directors or coordinators. In some cases, states have full-time staff, including directors, coordinators, and measurement specialists, who are hired primarily to handle assessment activities. In other cases, state- and local-level officials have overlapping duties and are not hired specifically to direct or coordinate assessments. For example, some states or LEAs may have a director of Title I programs, and one of the duties may be coordinating assessments and managing the contracts awarded to assessment vendors. The assessment duties may actually be a small part of their job, and states may not be able to separately account for the portion of salaries spent on assessment versus other duties.

Because of these accounting difficulties, reports of state expenditures on assessment activities required by the NCLB are highly variable. Two recent reports have investigated states' reports of costs associated with complying with the NCLB assessment requirements. Results of each investigation are discussed below along with a discussion of factors that may contribute to the variability reported across states.

U.S. Department of Education Study52

As part of the National Assessment of Title I, Congress required an examination of the cost of developing assessments in grades 3 through 8. ED interpreted this requirement as pertaining to general assessments in reading and mathematics. ED did not examine the cost of developing assessments in science, nor did it examine the cost of developing alternate assessments for students with disabilities. As such, reports of state expenditures on assessment activities that were obtained by ED likely underestimate the true expenditures for the state assessment system.

ED surveyed state assessment directors and asked them to provide information on the cost of their state assessment program for school year 2006-2007. State directors were instructed to report cost estimates for assessment development and assessment administration and maintenance . For reporting development costs, officials were asked to aggregate costs over time because test development is considered a multiyear process. For reporting administration and maintenance costs, officials were asked to provide estimates of costs only for school year 2006-2007.

Twenty-seven states reported the cost of developing or modifying reading and mathematics assessments to comply with the NCLB. Of the states that reported data, three states reported developing or modifying six assessments; six states reported developing or modifying eight assessments; and 18 states reported developing or modifying 12 assessments. Figure 1 shows the state-reported aggregate costs of developing or modifying reading and mathematics assessments in grades 3 through 8.

The average state-reported aggregate cost was approximately $14.0 million; the median aggregate cost was $9.6 million. State-reported aggregate costs; however, were highly variable. The level of state-reported costs for assessments ranged from a low of approximately $1.3 million to a high of approximately $51.2 million. Moreover, the variability does not appear to be related to the number of assessments that were developed or modified, nor does it appear to be related to state population. For example, in terms of the number of assessments that were developed or modified, the state with the lowest reported costs (Vermont) and the state with the highest reported costs (Arizona) both developed or modified 12 assessments, indicating that they changed every reading and mathematics assessment in grades 3 through 8. In terms of state population, a relatively small state (West Virginia) reported spending over 10 times the amount of a relatively large state (Illinois). Furthermore, Illinois reported developing or modifying a greater number of assessments than West Virginia, making the relationship between population, number of assessments, and costs even more ambiguous.

Thirty-nine states reported annual per-pupil costs of administering and maintaining reading and mathematics assessments in grades 3 through 8 and one grade in high school for school year 2006-2007. Figure 2 shows the state-reported annual, per-pupil costs.

The average state-reported per-pupil cost was approximately $29; the median per-pupil cost was $25. State-reported annual, per-pupil costs were highly variable. The annual per-pupil cost of administering and maintaining assessments ranged from a low of $3 (North Carolina) to a high of $99 (Delaware).

Figure 3 shows the relationship between (1) average state-reported annual costs of administering and maintaining the reading and mathematics assessments and state enrollment, and (2) average state-reported per-pupil costs of administering and maintaining the reading and mathematics assessments and state enrollment. Larger states reported higher annual total costs for administering and maintaining assessments. ED reported that the costs for the four states with the highest student enrollment were higher than the six states with the lowest student enrollment ($38.7 million compared to $2.9 million). Smaller states, however, generally reported higher per-pupil costs for administering and maintaining assessments than larger states. ED reported that the average costs for the four states with the highest student enrollment were lower than those for the states with the lowest student enrollment ($20 compared to $44). While larger states reported higher costs for administering and maintaining assessments, it is likely that they benefitted from economies of scale that led to lower per-pupil costs.

U.S. Government Accountability Office Study57

From August 2008 through September 2009, GAO conducted a performance audit to address the following questions: (1) How have state expenditures on assessments required by the ESEA changed since enactment of the NCLB in 2002, and how have states spent funds? (2) What factors have states considered in making decisions about item type and the content of their assessments? (3) What challenges, if any, have states faced in ensuring the validity and reliability of their assessments? (4) To what extent has ED supported and overseen state efforts to comply with the NCLB assessment requirements? To address these questions, GAO used a mixed-methods research approach that included reviews of state documents, a web-based survey of the 50 states and the District of Columbia, interviews with ED officials and assessment experts, site visits to four states, and a review of federal laws and regulations. For the purpose of this report, the results reported herein focus on GAO's first two questions, which are directly related to state assessment expenditures.

Forty-nine of 51 states responded to the web-based survey. Forty-eight of the 49 states reported that the state's annual assessment expenditures have increased since enactment of the NCLB. Over half of the 48 states reported that the primary reason for increased expenditures was the requirement to develop and administer additional assessments. The second most commonly cited reason for increased assessment expenditures was increased assessment vendor costs.

Figure 4 shows state assessment expenditures of 46 states for assessment vendors during school year 2007-2008. Of the 46 states that responded to the survey item, 44 states reported higher expenditures for assessment vendors than for state assessment staff. Of the 20 states that provided information on actual costs, GAO estimated that states spent over 10 times more on assessment vendors than on state assessment staff.

States were asked to rank assessment components in terms of each component's relative cost. Figure 5 shows the NCLB assessment activities that received the highest proportion of state assessment expenditures for school year 2007-2008. For the general state assessment, 23 of 43 states ranked test development as the most expensive assessment activity; 12 states ranked scoring as the most expensive assessment activity; and eight states reported that administration was the most expensive assessment activity. GAO reported that one reason for high test development expenditures is that most states release a certain number of their assessment items to the public each year. As discussed, the released items need to be replaced with newly developed items each year. States vary greatly with respect to the proportion of items they release. Nearly all states release some items in order to build credibility with policymakers and the public, but a handful of states may release 20%, 50%, or even 100% of their items each year.

The ranking pattern for the most expensive assessment activities was consistent for alternate assessments as well. Some states reported that the development of alternate assessments for students with disabilities significantly contributed to the overall increase in state assessment expenditures since the enactment of the NCLB. For example, officials in the four states visited by GAO reported that a general state assessment cost approximately $30 per student and an alternate assessment cost between $300 and $400 per student. Since a small number of students are eligible to take the alternate assessment, the overall impact of assessment expenditures on alternate assessments for students with disabilities as a proportion of the total assessment expenditures remains unclear.

States reported using primarily multiple choice items on assessments, in part to control costs. Thirty-eight of the 48 states that responded to this survey item reported that multiple choice items comprised all or most of the reading assessment, and 39 states reported that multiple choice items comprised all or most of the mathematics assessment. In addition to the cost savings, some states reported that the use of multiple choice items allowed them to score assessments within "challenging" time frames. Since enactment of the NCLB, states have faced pressure to score assessments and report the results prior to the following school year. Some states reported that they considered using more open-ended items; however, it was determined that it was not feasible to score these assessment items within the time period allotted.

State Variability in Expenditures

Previous reports of state expenditures on assessment activities required by the NCLB have clearly demonstrated the variability across states. These reports, however, did not seek to explain the reasons for this variability. A CRS analysis was conducted to determine whether there is evidence that the variability in state assessment expenditures is due, in part, to differences in state population. This was undertaken because questions have arisen regarding optimal ways to target federal support for state assessments. The current allocation strategy is heavily based on student population.

Data Source and Questions for Analysis

Survey data were obtained from GAO and used to conduct an analysis of the relationship between state population and expenditures on assessment. Data used for this analysis had a number of limitations. First, expenditure data are difficult to collect due to the variability inherent in state and LEA accounting methods. Second, the expenditure data were collected via a survey of state officials. It is likely that state officials had varying degrees of accuracy in completing the survey, making a comparative analysis less precise. A visual inspection of the data indicated that some state officials may not have understood how to complete certain survey items. A third limitation of the data was that the responses to survey items could not be linked to individual states. As such, it was not possible to explore other data sources and link them to the primary data source.

Forty-nine of 51 states responded to the survey. Some respondents did not submit complete survey data. As such, some of the analyses reported here include fewer than 49 cases. Because data provided by GAO did not include state names or populations, a proxy variable for "state size" was created to conduct the analysis. The state size variable is based on the number of students who took state assessments in mathematics in school year 2007-2008. States were separated into quartiles by the state size variable. The quartiles were used to explore the effect of a state's population on the following outcomes of interest:

1. The percentage of states' total funding for NCLB assessments provided by the Grants for State Assessments program (Section 6111) and the percentage of states' total funding for NCLB assessments provided by state government funds ( Table 2 ); 2. The total full-time professional equivalent (FTE) state-level expenditures and assessment vendor expenditures for NCLB assessments ( Table 3 ); and 3. The ratio of assessment vendor expenditures to state FTE expenditures ( Table 4 ).

Results

The analysis highlighted the relationship between federal and state funding of assessments, as well as the relationship between state size and state assessment expenditures. On average, federal formula funding accounts for 43% of states' total expenditures on assessments required by the NCLB (see Table 2 ). The percentage of total state assessment expenditures comprised by federal formula funding is somewhat dependent on state size, with smaller states reporting a larger federal contribution than larger states. The relationship between state size and state government funding of assessments is reversed; that is, smaller states report a smaller contribution from state government funds than larger states.

Expenditures on both state-level staff and assessment vendors have a positive relationship with state size; as state size increases, both kinds of expenditures increase (see Table 3 ). On average, states report spending approximately 16 times more on assessment vendors than on state-level staff dedicated to NCLB assessment activities (see Table 4 ). The analysis is not intended to suggest, however, that hiring more state-level staff to increase capacity would necessarily decrease the cost of assessment vendor services.

Across states with varying populations, consistent average trends emerge. These trends suggest that the population of a state does, to some extent, contribute to the overall cost of state assessment systems. The sizeable variability among states of similar populations, however, suggests that there are factors other than population that are contributing, sometimes significantly, to the cost of assessment systems. Factors that likely contribute to the cost of state assessment systems are design elements of assessment development, scoring, and differences in policy choices and implementation practices (see " Factors that Influence the Cost of State Assessment Systems "). Exploring the relationship between state assessment expenditures and these other factors is not possible with the current data.

Promoting Efficiency in State Assessment Systems

Moving forward, Congress is likely to grapple with decisions regarding how much support to provide for state assessments, how to allocate funds, and whether any practices can be supported to encourage efficiency. As has been noted, assessment practices and the assessment industry have changed dramatically following the passage of the NCLB, and there is a dearth of current research on matters related to the cost of varied assessment practices. Based on the literature that is available, and insights garnered through discussions with assessment vendors, this section discusses options for containing costs and possible tradeoffs associated with them.

As Congress considers the reauthorization of the ESEA, what will the federal government's role be in funding state assessments? Should federal funding aim to fund a certain proportion of state assessments required by federal law? Given the flexibility that states have to design their own assessment systems, it may be difficult for federal funding to meet a constantly moving target. The federal government could, however, develop policies that promote quality and efficiency in state assessment systems. Federal policies that aim to promote efficiencies, however, may risk reducing the quality of assessments if the efficiencies are supported without full consideration of the consequences. Certain efficiencies may involve tradeoffs in terms of the type of assessments, number of assessments, and timeline imposed on states to report results. Efficiencies may also require balancing state independence with promoting state consortia in order to realize economies of scale. The remainder of this report examines the potential advantages and consequences of these tradeoffs and compromises in the design of state assessment systems.

Some educators have discussed dissatisfaction with the quality of state assessment systems and the over-reliance on multiple choice items. One proposed alternative is to increase the use of performance-based assessment in state assessment systems. A performance-based assessment is an authentic task that assesses what a student knows and can do. It can take many forms, including conducting science assessments, writing persuasive essays, completing research projects, or applying mathematical problem solving to a real-world scenario. A recent study analyzed the costs involved for states to move from primarily multiple choice assessments to a "high-quality assessment" (HQA) system, which would utilize more performance-based items. The researchers found that the cost of a new HQA system would be approximately three times higher than a traditional multiple choice assessment. Implementing the HQA system with certain cost reduction strategies, however, led to a significant decrease in cost. In a hypothetical scenario where all cost reduction strategies were used, the HQA system was projected to be less expensive than traditional multiple choice assessments.

The cost reduction strategies used in the aforementioned study are not unique to a specific type of assessment. These strategies can be employed with both traditional and innovative assessment systems. The implications of using certain cost reduction strategies to promote efficiency in assessment systems are discussed below.

Scoring Practices

As discussed earlier, most state assessment systems use multiple choice assessments or multiple choice assessments with limited constructed response items. Currently, it is most common for states to use automated scoring for multiple choice items and human scoring for constructed response items. As part of their contract, assessment vendors are typically responsible for the human scoring of constructed response items, which represents one of the most costly and time-consuming activities in a state assessment system. In order to move away from multiple choice assessments, states would need to find a way to reduce the cost of human scoring.

Several options have been proposed to reduce scoring costs. One option is the use of distributed scoring. Distributed scoring involves scorers working from home, accessing the assessment items through an online platform. In this arrangement, the assessment vendor is not required to supply a facility or equipment for scorers. In reality, it is likely that assessment vendors would use a mixture of onsite and distributed scoring. When investigating cost strategies, researchers modeled the savings involved in using a 50-50 mix of onsite and distributed scoring. The 50-50 mix resulted in an 11% reduction in the costs of scoring constructed response items.

Another option that has been proposed to reduce scoring costs is using teachers to score assessments. Teachers evaluate student performance on a daily basis, and it may be a natural extension of their job to score state assessments. Furthermore, teachers would be able to score the full range of assessment types, including multiple choice, constructed response, and performance-based assessments. Teacher scoring could be implemented in several ways. For example, teachers could score assessments as part of their expected duties or as a professional development activity. Alternatively, teachers could be paid a stipend for the extra time involved with training and scoring assessments.

A number of issues may arise, however, if teachers score assessments. First, since teachers have a stake in the outcome of the NCLB accountability system, the state would need procedures in place to ensure objective scoring. In the NCLB accountability system, states must hold schools and LEAs accountable for student performance; therefore, it may not make sense to have teachers score assessments within their school or LEA, given that they have a vested interest in the outcome. It may be possible to require teachers to score assessments from other schools or other LEAs; however, the potential travel involved may negate the cost saving potential of using teachers.

Another option to consider in reducing scoring costs is the advent of artificial intelligence (AI). AI software has been developed to score some constructed response items. Some research finds that AI produces results that are relatively comparable to human scoring; however, the cost for AI scoring is currently too high to realize any savings in a state assessment system. There is speculation that the costs of AI scoring will come down considerably in the next several years, and it may serve as a cost reduction strategy in the future.

A related issue to consider is the time required to score assessments. Under the NCLB, the state assessment is typically administered in the spring and results must be reported before the beginning of the next school year. The timeline is driven by regulations that require notifying parents of their public school choice options under the NCLB, which is dependent upon the results of state assessments. Regulations specify that an LEA must notify parents of public school choice options made available to students who attend a school in need of improvement. Parental notification "must be made sufficiently in advance of, but no later than 14 calendar days before, the start of the school year so that parents have adequate time to exercise their choice option before the school year begins." Since decisions regarding the determination of schools in need of improvement affect public school choice options, assessment results must be available no later than 14 calendar days before the start of the school year.

If multiple choice assessments were to be replaced by assessments with more constructed response items or performance items, there would be an increase in the amount of human scoring. To accommodate the increase in human scoring, states may need an extended window of time to score assessments. This extended window of time may require either (1) testing students earlier in the year, or (2) allowing results to be reported after the start of the next school year. If students are tested earlier in the year, the results of the assessment may not accurately represent a full year of instruction, and the results may not reflect a valid measurement of grade-level academic content and performance standards. On the other hand, if results were allowed to be reported later (i.e., after the start of the next school year), parents would not have the ability to exercise the public school choice option included in the NCLB accountability system.

State Consortia

Under the NCLB, states were afforded the flexibility to develop their own state academic content and performance standards and to develop state assessments that measure student achievement against those standards. This flexibility created the possibility that over 50 unique state assessment systems would emerge. Each assessment system had the potential to differ in terms of assessment type, assessment development, scoring procedures, administration procedures, timing of the assessment, and so forth. Because each state was focused on developing assessments that would measure specific state standards, there was limited interest in pooling resources across states to develop common assessments.

As discussed earlier, there is currently one state consortium that works to develop, maintain, and administer assessments that fulfill the requirements of the NCLB. Due to the reported success of this consortium, interest in the use of state consortia has increased. The use of state consortia may promote efficiency in state assessment systems by allowing states to share the development and overhead costs. One study modeled the potential cost savings of state consortia comprised of 10, 20, and 30 states. Participating in a 10-state consortium was estimated to reduce average per pupil costs on assessments by 24% compared to the costs of a single state. Participation in a 20-state consortium reduced average per pupil costs by 27% compared to a single state, and participation in a 30-state consortium reduced average per pupil costs by 30% compared to a single state. Although states would continue to realize savings with larger consortia, the cost model indicates that the majority of the savings are realized in a 10-state consortium. If states choose to enter a consortium in the future, they may consider the incremental savings of a larger consortium versus the ease of working with a smaller consortium.

ED has taken steps to promote the use of state consortia through its Race to the Top Assessment Program (RTTT Assessment Program). The RTTT Assessment Program is a $350 million program focused specifically on funding comprehensive assessment systems for state consortia. The Secretary announced the winners of the RTTT Assessment Program on September 2, 2010. Two state consortia received awards under this program: (1) Partnership for Assessment of Readiness of College and Careers (PARCC; 26 states), and (2) SMARTER Balanced Assessment Consortium (SBAC; 31 states). Across the two applications, 45 states are participating in at least one of the consortia.

Both PARCC and SBAC proposed to develop assessments that measure student knowledge and skills across a common set of college- and career-ready standards in mathematics and English language arts for grades 3 through 8 and one grade in high school. The assessments must assess all students, including English language learners and students with disabilities. Because the RTTT Assessment Program grants were awarded relatively recently, it is unclear how they may affect state assessments used for accountability purposes. ED's "expectation" is that states adopting assessment systems developed through this program will use them to meet the requirements for state assessment systems under Title I of the NCLB. The RTTT Assessment Program, however, is a one-time competition, and it is unclear whether any continued support for participating state consortia would be considered. Ultimately, decisions regarding the type of state assessments that meet the requirements of Title I may be determined by Congress during the next reauthorization of the ESEA.

Technology

As technology becomes less expensive, online delivery of state assessments may lower the cost of state assessment systems. Using online delivery may potentially reduce costs associated with production, manufacturing, and shipping assessments from the vendor to schools. Some states, such as Oregon and Virginia, have already moved away from paper-and-pencil tests to online delivery, and it is expected that other states may follow. In one study, the cost of online delivery was about 12% less than paper-and-pencil tests; however, the use of technology was combined with other cost reduction strategies, which confounds the actual savings of online delivery. Furthermore, the study did not include the additional cost of purchasing equipment in its estimate, since this cost is highly variable depending on the number of computers already available.

One of the major challenges of online testing is ensuring that all schools have the necessary equipment to allow for large-scale assessment in a relatively short period of time. A school's readiness to implement online testing may be a reflection of the resources available at the school, which may inadvertently highlight the technology gap between schools. Furthermore, it is not known at this time how often schools would need to replace equipment in order to work with new software or online delivery mechanisms that are constantly changing. Federal, state, and local resources may need to provide ongoing support for the purchase of equipment if states are to develop and maintain online delivery systems for state assessments.

Another concern with the use of online delivery of assessments is the potential for technological problems that may lead to delays in testing or scoring. In the worst case scenario, results could be lost completely. Some technological glitches have already occurred in Virginia. In some cases, students could not complete their online test due to a glitch in the server maintained by the assessment vendor. The students were required to retake the assessment on a different day, which raises some concern about the validity of the scores from the second administration. If online delivery moves forward, states may need to ensure that schools have the infrastructure in place to carry out large-scale assessment and develop policies to deal with technological glitches in the administration or scoring of state assessments.

Appendix. Federal Funding for State Assessments

To assist states in complying with the new assessment requirements, the NCLB authorized two programs that specifically provide funding for the development and administration of state assessments: Grants for State Assessments (Section 6111) and Grants for Enhanced Assessment Instruments (Section 6112). To carry out these programs, $490 million was authorized to be appropriated in FY2002, and such sums as may be necessary were authorized for each of the five succeeding fiscal years. In general, funds up to the "trigger amount" (discussed below) are distributed by formula grants under the Grants for State Assessments program and the remaining funds are distributed through a competitive process under the Grants for Enhanced Assessment Instruments. The remainder of this section discusses the formula grant program Grants for State Assessments.

Under the Grants for State Assessments program, statutory provisions specify that the Secretary shall make grants to states for the following purposes:

to pay the costs of the development of the additional state assessments and standards required by Section 1111(b) of the NCLB, which may include the costs of working voluntary partnerships with other states, at the sole discretion of each state; and if a state has developed the assessments and standards required by Section 1111(b) of the NCLB, to administer assessments or carry out other activities related to ensuring that the state's schools and LEAs are held accountable for the results.

The assessment requirements under Title I-A of the NCLB are contingent upon the appropriation of minimum annual amounts for state assessment grants; this minimum annual amount is referred to as the "trigger amount" in the formula allocation. The "trigger amount" is defined in legislation as the amount made available to carry out Sections 6111 and 6112 minus an amount specified in Section 1111(b)(3)(D). For each of FY2002-FY2008, at least the minimum "trigger amounts" have been appropriated for these grants. The authorization of appropriations for the assessment grant programs expired in FY2008; however, these programs have continued to receive an appropriation above the "trigger amount" specified for the most recent year of authorization (i.e., $400 million in FY2008).

From the "trigger amount," Grants for State Assessments are allocated as follows:

1. The Secretary shall reserve 0.5% of the total for the outlying areas and 0.5% of the total for the Bureau of Indian Affairs (BIA). 2. From the remainder of the total, the Secretary shall allocate to each state an amount equal to $3 million. 3. From the remainder of the total, the Secretary shall allocate funds among states in proportion to their number of children and youth aged 5-17 years.

All states, the District of Columbia, and Puerto Rico receive funding under the Grants for State Assessments program. Table A-1 shows state appropriations for the Grants for State Assessment program for FY2002-FY2011 (estimate).