As a follow-up to an earlier ECS report on the extent to which states were prepared to implement President Bush's education plan, this report provides an in-depth examination of three major Bush plan initiatives: assessing student performance, motivating and assessing low-performing schools, and providing school-choice options. The report begins with a brief summary of the history of the federal role in education, federal funding of education, and issues surrounding the Bush proposal to tie federal funding to research evidence. The chapter on assessing student performance examines the pros and cons of annual testing, classroom time spent on testing, and the cost and types of tests. The chapter also includes sections on public attitudes about testing, adjustments in state assessment programs, and an examination of states providing disaggregated testing data (for example, race/ethnicity, gender). The chapter on motivating and assisting low-performing schools examines the pros and cons of the state use of sanctions, rewards, and support structure. The final chapter discusses Bush's proposal to allow parents to deduct up to $5,000 for education-related expenses, including expenses of sending their children to private or parochial schools. The report also reviews the provisions of and legal challenges to education tax-credit and tax-deduction programs in Arizona, Illinois, Iowa, Minnesota, and Puerto Rico. (PKP)