In an attempt to include more students with disabilities in large-scale assessments, 12 states (Alaska, Arizona, California, Connecticut, Delaware, Iowa, Louisiana, North Dakota, South Carolina, Utah, Vermont, and West Virginia) allowed out-of-level testing during the 2000-2001 school year. This report discusses the context of state assessment systems, including the accountability practices in which out-of-level testing is implemented. It then describes specific out-of-level testing policies in those states with policies that allow students to be tested out of level in large-scale assessments. By reviewing all 12 states' policies on out-of-level testing, it was found there was a wide variability across states in both policy content and suggested practices for implementing out-of-level testing at the local level. The report concludes by highlighting four discussion points. First, there is a need to increase the specificity of out-of-level testing policy language to guide testing at the local level in a suitable manner. Second, analyses indicate four labels (accommodations, modifications, nonstandard, and alternate assessment) are used for out-of-level testing across states, but there is little consistency in what the terms mean. Third, what is reflected in state policy may not reflect implementation. Fourth, the long-term effects on students are unknown. (Contains 12 references.) (CR)