State legislation requires that the Texas Education Agency write a plan to reduce the state's cross-sectional and longitudinal dropout rates to no more than 5 percent by 1997-98. This report presents the current plan, with current aggregate and disaggregate data on the dropout rate of students in grades 7 through 12 and projections for cross-sectional and longitudinal dropout rates for the next 5 years. A progress report is presented for the recommendations from the 1991 state plan in the following categories: (1) continued action by the Texas Education Agency; (2) actions without fiscal implications; (3) actions with immediate fiscal implications; and (4) recommendations with long-term fiscal implications. Since publication of the plan in 1991, the number of dropouts has consistently declined, from 91,307 in 1987-88, to 53,421 in 1991-92. Students still tend to drop out in the ninth grade, and ethnic minority students still drop out in disproportionate numbers, but combating these facts is a major agency focus. Twenty recommendations to further reduce the dropout rate are included. Five tables summarize dropout information. A list of 70 references is included, and dropout data are presented in Appendix I (15 tables), with an overview of recommendations and a survey of immigrant students in Appendixes II and III. (SLD)