To address the issues raised by the possible expansion of administrator competency testing, a survey was sent to each state education agency in late 1988. Using survey data and a literature review, this paper discusses the development of administrator competency testing, explores pertinent issues, makes recommendations for policy makers opting to use these tests, and suggests workable alternatives. Currently, 15 states use administrator competency tests. So far, there is scant evidence that such testing has achieved its primary objective--ensuring that certification candidates have attained the knowledge required to fulfill the duties of a school administrator. Various issues associated with student and teacher competency testing programs are relevant to administrator competency testing. These include test validity, impact on preparation programs, minority recruitment, legal challenges, and costs. Alternative practices being used in several states include assessment centers, on-the-job training and assessment, on-the-job assessment without training, alternative forms of testing, multiple competency indicators, better recruitment strategies, and improved administrator preparation. Policy makers need to clarify objectives to be accomplished through testing, determine costs of test development, study other states' experiences, be aware of legal challenges and possible racial and cultural biases, and consider alternative practices. (43 references) (MLH)