In the summer of 1987, a project was undertaken by a consortium of eight California community colleges to develop valid and culturally fair assessment procedures for placing students into appropriate level courses. The specific objective of the project was to provide a guide to the state's community colleges for the development of these procedures in a manner consistent with the statewide matriculation plan. Data for the project were obtained from completed surveys of 24,000 students and 1,600 faculty members at the 8 colleges regarding the skills considered most important for student success; a comparison of 1987-88 student scores on assessment tests to students' actual grades; and a retrospective study of the relationship between student characteristics and grades. Major findings included the following: (1) while reading and study skills were considered important by students and faculty in all disciplines, other skills varied from subject to subject and from college to college; (2) over 80% of students and faculty felt that students were appropriately placed into English or math classes; (3) new students who had tested at college level in reading, writing, and/or math were more likely to pass these classes than those testing one level below college level; (4) in general, 30% of the students predicted to pass courses on the basis of background characteristics failed to do so, representing the greatest error in the project's attempt to predict grades; (5) the eight variables found to be the best predictors of student grades were high school graduation status, number of hours employed, units planned, age, high school grade point average, math placement test score, reading placement test score, and English placement test score; and (6) in some colleges, course grades were predicted more accurately for White and Asian students than for Hispanic and Black students. Recommendations are provided for improving institutional practices in the areas of assessment, orientation and advisement, instruction, and research. The student and faculty survey instruments are appended. (JMC)