This annual report is designed to assess the efforts of Tennessee's State Board of Education and Higher Education Commission, to provide an overview of the challenges and prospects for public education in Tennessee, and to present a statement on educational plans and goals for the future. The report outlines 15 improvement initiatives for elementary, secondary, higher education. It then reports on progress on 26 specific educational objectives, such as general educational development (GED) enrollment/completion, college enrollment, persistence-to-graduation, degrees awarded, African-American college enrollment, high school dropout rates, retention rates, standardized test scores, and adult literacy. Five goals are identified as central to continued progress in educational improvement: (1) adequate funding of elementary, secondary, and higher education; (2) the implementation of a statewide technology network; (3) increased use of state of-the-art technology; (4) increased levels of preschool education for at-risk children; and (5) increased levels of university research. Seven appendixes provide information on the report requirements, state high school graduation requirements, high school course requirements for college admission, the Master Plan for Tennessee Schools, performance goals and standards for school systems, Tennessee Challenge 2000 goals, and the Master Plan for Higher Education. (MDM)