This report provides information on student performance at the state, regional, and school system levels for students in the classes of 1998-2002 for 117 public school systems and 35 charter schools. The class of 1998 was the first North Carolina class required by the State Board of Education to meet a higher competency standard in the areas of reading and mathematics in order to receive a high school diploma. The students who graduated at the end of the 1997-98 school year had demonstrated grade-level proficiency (Achievement Levels III or IV) on the eighth-grade reading and mathematics tests, the competency tests, or other acceptable screening tests. The percentage of students passing the Competency Standard increases with each grade. Sixty-eight percent of 8th graders passed the Standard in the 1997-98 school year, while 85% of 10th graders and 95% of 12th graders did so. There are fewer disparities in percentage passing by ethnicity at grade 12, with all groups except that designated multiracial passing around 90% or better. At the end of grade 8, however, Black, Hispanic American, and American Indian categories pass at a lower rate than White, Asian, or Multiracial. This pattern holds for the classes of 2001 and 2002, with many minority students not passing competency by the end of grade 9. School systems throughout the state are implementing changes to increase the number of students who pass the Competency Standard early in their high school career. Local education agencies (LEAs) and charter schools are implementing remediation classes; informing teachers, counselors, and parents; and practicing test-taking skills. LEAs report the use of practice tests, remediation classes, and mentoring programs as particularly effective. Appendixes contain a description of the achievement levels, instructions for completing the report on competency for the state, final reported LEA memberships, and a list of charter schools. (Contains 13 figures and 18 tables.) (SLD)