This report compares Arizona's reading and mathematics performance on the most recent administrations of the state assessment with performance on the National Assessment of Educational Progress (NAEP). To indicate how Arizona is doing in narrowing the academic achievement gap between African American, Latino, or low-income students and their white, middle class peers, the report presents NAEP data by race, ethnicity, and family income. The report presents other state-level data on Arizona's K-college education, including demographic distribution across each educational level, participation and success in Advanced Placement, percentage of students taking high-level courses, school funding gaps, and high school and college graduation rates. Results from the 2002 Arizona Instrument to Measure Standards (AIMS) show that 58 percent of all 5th graders were meeting or exceeding state reading standards. On the 1998 NAEP 4th grade reading assessment, 53 percent of 4th graders scored at the basic level, while 22 percent performed at proficient or above. The gap between white and Latino 4th graders in reading widened by 12 points. Results from the 2002 AIMS showed that 20 percent of all 8th graders were meeting or exceeding state mathematics standards. Between 1990-2000, 8th graders gained 11 points on the NAEP 8th grade math assessment, and the gap between whites and Latinos on the 8th grade math assessment widened by 3 points. Among the states, Arizona had the sixth largest Latino-White achievement gap on the 1998 NAEP grade 4 reading assessment and the eighth largest on the 2000 NAEP grade 8 math assessment. White students attended college and took Advanced Placement exams at significantly higher rates than minority students. Over one-third of Arizona's secondary classes were taught by teachers lacking a major or minor in the field. Districts with the highest child poverty rates, and those with the highest minority enrollments, had fewer state and local dollars to spend per student than districts with the lowest poverty and minority enrollment rates. (SM)