The report of the National Academy of Education (NAE), "Setting Performance Standards for Student Achievement," provides an interpretation of NAE investigations into the procedures surrounding establishment of achievement levels for the National Assessment of Educational Progress (NAEP). The NAE report synthesizes the investigations of other research efforts commissioned by the NAE Panel on the Evaluation of the NAEP Trial State Assessment. The following documents have been reviewed: (1) the NAE report itself, with 10 studies commissioned in preparing the report; (2) "Setting Achievement Levels on the 1992 National Assessment of Educational Progress in Mathematics, Reading, and Writing" from the American College Testing Program, 1991; (3) "NAGB Policy Framework and Technical Procedures for Setting Appropriate Achievement Levels for the National Assessment of Educational Progress" (National Assessment Governing Board, 1991); and (4) "The Reliability and Validity of the 1992 NAEP Achievement Levels" from American College Testing, 1993. It is concluded that the NAE evaluation is a seriously inaccurate representation of the technical and procedural propriety of the NAEP levels-setting process. Errors and inaccuracies are described in the general areas of authority and credibility, conclusions about the use of the Angoff method, procedural propriety and results, and the validity of NAEP levels. Accurate conclusions are also reviewed, and some constructive suggestions are made. (Contains 35 references.) (SLD)