This report reviews the current status, empirical findings, theoretical issues, and practical considerations related to state-level minimum competency testing programs. It finds that, although two-thirds of current testing programs now use direct writing prompts to assess writing achievement, essentially all programs rely on multiple choice tests to measure knowledge in the other subject areas. It also concludes that empirical evidence regarding the effectiveness of minimum competency testing programs is mixed. It reports improved achievement in basic reading and mathematics skills, especially when curriculum focuses on the same basic skill items found on the tests. However, the report also finds evidence of unintended negative effects of minimum competency testing programs, including lack of transfer to higher order skills, increased dropout rates (especially for minority and low achieving students), a narrowing of the curriculum to test content, corruptibility of high stakes tests, and testing time as time taken from teaching. Overall, the report finds a conflict between minimum competency and standards-based assessment systems since competency testing essentially contradicts current mandates for having students learn rigorous content standards. It recommends against mandating a state-level minimum competency program. (Contains 28 references.) (DB)