A study involving 103 male and 117 female students entering a major urban university assessed the interaction between test anxiety and skill deficits. The effects of prior achievement and test anxiety on performance on two competency exams were also examined. Instruments consisted of minimum competency tests for reading comprehension and mathematics and a self-report measure of test anxiety (the Test Anxiety Inventory). Two competing explanations of the role of test anxiety--cognitive interference and skill deficits--were examined using a structural equation model. The interference hypothesis assumes that anxiety interferes with cognitive processing during testing, while the deficit hypothesis suggests that poor performance of test-anxious examinees is attributable to skill deficits and/or an interaction between test anxiety and skill deficits. Prior achievement, test anxiety, and their interaction were represented in a structural equation model as causal influences on test performance. Results suggest that test anxiety (i.e., worrying) and skill (as evidenced in prior academic achievement) contribute to performance and that these effects differ across tests. The interaction term did not add significantly to the explanation of performance. Findings are discussed in terms of their implications for test anxiety theory and competency testing. Three data tables and two figures conclude the document. (Author/TJH)