This first annual report details North Carolina's performance and progress in five areas of its First in America goals: high student performance (every student in school and making strong progress, every graduate ready for college and work, and every school accountable for student learning); every child ready to learn (every child with access to quality child care, every parent a good first teacher, and every child ready to begin school); safe, orderly, and caring schools (every school free of drugs, weapons, and disruption; every school with adequate facilities and materials; every student known and cared for; and every family welcomed); quality teachers and administrators (every teacher competent, caring, and qualified; every principal a leader; and every school a good place to work and learn); and strong family, business, and community support (every family involved in their child's learning, every community involved in education, and every child with access to quality health care). The report also looks at financing North Carolina's schools and making North Carolina schools first in America by 2010. Two appendices present a computation of First in America grades and the First in America survey methodology. (SM)