This is the final report of the National Academy of Education's Panel on the Evaluation of the National Assessment of Education (NAEP) Progress Trial State Assessment. In this report, the Panel considers philosophical, technical, and policy issues concerning the NAEP in the immediate future and in the long term. The high technical quality of the NAEP assessment and its independence from unwarranted influences and political pressures have enabled the NAEP to monitor trends in educational achievement reliably since its inception in 1969. In recent years, the NAEP has expanded the number of students it assesses and has undergone substantial changes in content, design, and administration. Taken together, these changes have produced complexities that threaten the entire program. This report suggests ways in which the NAEP should broaden its conceptualization, assessment, and reporting. It asserts that educational achievement must be redefined in terms of what students need to know and be able to do for the 21st century and that education conditions must be created to support this vision of achievement. The fundamental purposes of the NAEP should be to inform the public and policy makers about student achievement trends in the nation and the states and to stimulate democratic debate about how to improve education. It is important that NAEP standards be set in defensible ways. Details are provided for a program of innovation and research that will require substantial planning before the reauthorization of the NAEP in 1998. These chapters are included: (1) "The Central Purpose of the National Assessment of Educational Progress"; (2) "What Should NAEP Measure?"; (3) "Measuring Achievement"; (4) "Informing the Nation"; (5) "Connecting to the Larger Network of Education Information"; and (6) "Planning for the Long Term." (Contains 7 figures and 43 references.) (SLD)