Little is known about the costs of setting up and implementing legislated minimal competency testing (MCT). To estimate the financial obstacles which lie between the idea and its implementation, MCT requirements are viewed from two perspectives. The first, government regulation, views legislated minimal competency requirements as an attempt by the state to regulate the school district. Regulatory actions may increase operating costs for regulatees (school districts). Costs are organized in these categories: legislation; implementation; excess burdens thrust upon schools from compliance with regulations (such as remedial instruction); restriction of desirable elements from the curriculum; and neglect of music, arts, humanities, and citizenship. The second perspective, cost benefit, presents a problem because benefits such as increased employability of students are almost impossible to measure. However, costs which have been estimated include test development, administration, state monitoring, and remediation programs. To make testing programs cost-effective, the following recommendations seem appropriate: (1) the state rather than local agencies should administer the programs; (2) testing should not focus on the individual student; (3) cooperatives should be established to share tests; (4) test results should be reported publicly; (5) school districts should be rewarded for high performance; (6) financial inequities should be reduced; and (7) federally run testing should be discouraged. Descriptions of MCT programs by state are included. (CP)