Intended for federal, state, and local policymakers, the document looks at the actual policies and practices of local and state education agencies in carrying out their minimum competency requirements, with particular emphasis on the mandates of P.L. 94-142 (the Education for All Handicapped Children Act) and Section 504 of the Rehabilitation Act of 1973. Findings from a survey of 20 states and federal agencies and national organizations representing handicapped students are reviewed for the following areas: includsion or exclusion of handicapped students, applicability of federally required evaluation and placement standards to minimum competency programs, individualized education programs and minimum competency programs, remediation and reevaluation for handicapped students failing competency tests, and minimum competency testing as a graduation requirement for handicapped students. Listed among findings are that minimum competency programs neither universally exempt handicapped students from their testing requirements, nor assure them the opportunity to participate in programs; that several states tie minimum competency testing to high school graduation; and that local organizations of parents of handicapped children have not yet surfaced their concerns regarding minimum competency programs in any systematic way. (SBH)