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. 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. 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. 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. 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. 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.