In 1984, consistent with reform efforts, the Texas legislature had directed the State Board of Education to adopt an appraisal process and criteria with which to appraise teachers' performance for career ladder purposes, improvement of instruction, and contract renewal decisions. In 1989, the Texas Legislature mandated an evaluation study of the Texas Teacher Appraisal System (TTAS) to be conducted by the Texas Education Agency. This report describes the implementation and results of the evaluation. The analyses generally indicated that the TTAS as implemented did not result in discrimination among various performance levels of teachers. This conclusion was based on the finding that use of the TTAS resulted in repetitive scores, patterning of score frequencies, and use of only two of the five available summary categories. Although most respondents agreed that the TTAS has potential as a teacher appraisal system, it is not being used in a manner consistent with good practice. There was also no support from the results of the study for keeping the career ladder as currently implemented in districts. Several approaches to improving the TTAS have potential, such as restricting the use of TTAS to beginning teachers, including objective measures of student performance, and making participation in the system voluntary. Contains several recommendations. (LL)