The Board of Education of the School District of the City of Saginaw requested the Department of Evaluation Services to review the literature relative to competency testing, especially for the elementary grades. This review on competency testing programs and competency based education (CBE) covers several areas. The emphasis on educational accountability has increased during the past 28 years. CBE consists of three elements. Minimum competencies should be defined by how effectively students can function in life roles. The attainment of specific competencies should be a standard for graduation. A summary of what constitutes successful performance of competencies should be included in the certification process. Activities of other school districts in this area are discussed. The alternatives to be tested in a competency based testing program include basic skills, school subjects, life role competency areas, and basic skills applied in school subjects and life role competency areas. The various methods to assess minimum competency in these areas is discussed. An illustration is given of how one district began its program as well as a listing of benefits and problems. Recommendations for competency program design conclude the review. (DWH)