In 1990 the Kentucky state legislature passed the Kentucky Education Reform Act (KERA), which mandated a total overhaul of the state's kindergarten through grade 12 public school system and was designed to result in equitable education for all students. Accountability components of the KERA include financial incentives for staff in schools where student gains are exemplary and the use of sanctions to cause staff in ineffective schools to boost student achievement gains to an acceptable level. These features are operationalized through the Kentucky Instructional Results Information System (KIRIS). KIRIS had to comply with the legislative mandates and had to produce assessments that would be technically defensible and politically credible for "middle" stakes, rather than high- or low-stakes assessment. The state's reform efforts provide an opportunity to examine systemic reform in assessment and accountability. This description of assessment development and implementation demonstrates that the KERA has had classroom impact. Change has been forced in many areas because the incentive and sanction provisions have made KERA and KIRIS impossible to ignore. Now the state's problem is to move on to a reform effort that can fine tune itself without the external shocks that came with KERA implementation. In the current political climate, the system sustained on rewards and sanctions may not last until its supposed end date in 2012. (Contains 2 figures, 3 tables, and 20 references.) (SLD)