The suit of Peter Doe v. the San Francisco Unified School District resulted because the client was awarded a high school diploma attesting to the fact that he had satisfactorily completed all the requirements for high school graduation; however, the client was unable to read above a fifth-grade level or to adequately function in society. The court denied the complaint and stated that it was up to the legislature to change the present situation in the schools. Now all but one state has enacted or is considering enacting competency-based approaches to instruction. California's Hart Bill (AB 3408) as amended by AB 65 of 1977 is described. It mandates procedures which, if not followed, could leave districts open to malpractice suits. A model competency-based program developed by Merle S. McClung is also described. McClung was concerned with the possibilities for discrimination in a competency testing situation and designed a program that would assure that competency testing is fair to students. (Author/MLF)