This handbook is a guide to the "Test Development Notebook" of the System for Pupil and Program Evaluation and Development (SPPED). It describes the contents and organization of the notebook, suggests various uses of the exercises, provides sample test designs, outlines test production procedures, and offers guidelines for score interpretation. The notebook is a collection of 1,725 multiple-choice cloze (MCC) exercises designed to measure literal comprehension. Four types of material are represented in the "Test Development Notebook": (1) textbooks in reading/literature, language arts, social studies, sciences, and mathematics; (2) articles and editorials from newspapers and news magazines; (3) consumer materials, such as instructions, catalogs, or advertisements; and (4) reference materials, such as test instructions, encyclopedias, and children's magazines. While the initial use of the MCC exercises has produced evidence for their reliability and validity, their ultimate utility and worth will be established only when they have had further trial in a variety of school settings. (Author/PN)