The National Assessment Governing Board (NAGB) is responsible for improving the form and use of the National Assessment of Educational Progress (NAEP). The NAGB is beginning to define achievement levels to state clearly what students should know and be able to do at key grades in school. This report creates a policy framework, definitions, and technical procedures for establishing these achievement levels. The report is divided into three sections: policy framework, technical procedures, and display of NAEP results in terms of achievement levels. The following three levels are to be established for each grade and subject tested: (1) proficient, a solid academic performance for grades 4, 8, and 12; (2) advanced, signifying superior performance beyond mastery at grades 4, 8, and 12; and (3) basic, a demonstration of partial mastery of knowledge and skills that are fundamental for proficient work at grades 4, 8, and 12. The NAGB intends to use this framework for reporting results for newly developed assessments for 1992 and subsequent years. An ad hoc advisory panel is to be appointed to assist in defining the levels, drawing on a number of assessments and studies. The second part of this report, technical procedures to be used, includes a modified Angoff procedure for standard setting. Appendices to the second section provide sample forms for use in the process. The third section of this document contains four sample graphics as potential ways of reporting achievement level information. (SLD)