Recommendations of the Study Group on the National Assessment of Educational Progress (NAEP) are summarized in this report. The report is then reviewed by the National Academy of Education. The recommendations are to: (1) maintain NAEP's continuity; (2) assess the core curriculum; (3) focus on transitional grades (4, 8, and 12) and sample out-of-school 17-year-olds, adults and private school students; (4) create an independent Educational Assessment Council, with members to be appointed by the Secretary of Education; (5) provide for add-on and school district assessments; (6) assess and provide for add-on assessment of private school students; and (7) increase federal funding to 20 to 30 million dollars per year (approximately five times the present amount). The Study Group strongly recommends that achievement data be collected on each state and the District of Columbia and that state and local assessments be linked with NAEP. Curriculum areas to be tested include higher order thinking skills; reading, writing and literacy; mathematics, science, and technology; history, geography, and civics; and special topics which are assessed occasionally. Recommendations for measurement include computer assisted testing and scaling. The National Academy of Education supports the conclusions of the Study Group, with some reservations about state-by-state comparisons. Appendices include names of subgroup participants, the list of commissioned papers, a copy of Public Law 98-511 Section 405(e), a chronology of NAEP, and a description of the Elementary/Secondary Information Data System. (GDC)