The Texas Education Code requires the Texas Education Agency to submit a comprehensive biennial report on the number of students retained in grade level in the Texas public school system. This report presents a summary of the literature on the effects of grade level retention on the academic, social, and psychological development of students, along with an overview of student retention policy in Texas. Data on retention statewide, accumulated over a 3-year period since the 1992-93 school year, by grade, ethnicity, gender, and other student characteristics are also presented. The trends in this report will inform the decisions of policymakers and educators. In 1994-95, 128,369 students were retained in grade, for an annual retention rate of 4%. The highest retention rate was found for grade 9, and the highest retention rate for elementary school was at grade 1. Males were retained more often than females, and Hispanic and African American students were retained more often than White students. The highest retention rates were for urban districts and for districts with the highest percentages of minority and economically disadvantaged students. Research has shown that retention in grade does not help students academically or socially, and that those who repeat a grade are more likely to drop out of school. Four appendixes contain data on retention by grade and ethnicity, retention by district, retention by campus characteristics, and district retention rates by grade. (Contains 12 tables, 3 figures, and 52 references.) (SLD)