Evaluation of education involves assessing the effectiveness of schools and trying to determine how best to improve them. Since evaluation often deals only with the question of effectiveness, performance indicators in education are designed to make evaluation more complete. They are a set of statistical models which relate several important variables to objectives of the schools. The objectives considered may be student achievement, noncognitive functioning, or social functioning. These objectives are analyzed for statistical relationships with such variables as demographic characteristics, student characteristics, and elements in the school organization. Steps in developing such models include stating the educational objectives, selecting and developing measures for each objective and variable, collecting data from each school district, and analyzing the data to determine the best mix of variables related to each objective. By looking at the relationships between variables and objectives, descriptive, predictive, and optimization information is generated. Although absolute answers are not provided, the instruments should help school officials decide on allocation of funds, school organization, teaching methods, and instructional material best suited for achieving a school's objectives. (TT)