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Originally Announced on March 29, 2004 in the following notice:
http://www.ed.gov/news/pressreleases/2004/03/03292004.html

Policy Letter to Chief State School Officers found in the following: http://www.ed.gov/policy/elsec/guid/stateletters/prates.html

What NCLB says:
Requires that at least 95 percent of students measured by total school population and by subgroups participate in the state’s annual assessment of student achievement. The subgroups include ethnicity, poverty, disability, or English language proficiency. If a school, district or states do not meet the 95 percent participation rate, the entity was identified as not making AYP. Some states excluded children with disabilities or children who were not English proficient from taking state assessment. The 95 percent participation requirement was designed to assure that no child is excluded.
Each state may determine how large the subgroup must be to be considered separately for participation rate calculations. The Federal Regulations 43 Code of Federal Regulation Section 200.7 say that each state must determine the minimum number of students in a subgroup “based on sound statistical methodology” and that the minimum number must be “sufficient to yield statistically reliable information for each purpose for which disaggregated data are used.”
Make-up assessments count toward the school’s participation rate if a student is unable to take the scheduled assessment.
The Changes:
States will be able to average participation rates over a three-year period. A State may use data from the previous one or tow years to average the participation rate data for a school and/or subgroup, as needed. If this two- or three-year average meets or exceeds 95 percent, the school will meet the AYP requirement.
Students who are unable to take the test during the testing and make-up periods because of a unique, significant medical emergency will not count against the school’s participation rate. Although students remain enrolled in the school during this period, schools do not have to include students when calculating their AYP.
States were already permitted to make exception for schools that appeal their designation as needing improvement, but the new policy allows schools to exempt students with medical problems WITHOUT state approval.
 
How It Was Before the Rules Change:
If a few absent students were absent and did not take the state assessment, their absence could have prevented the school from meeting the 95 percent participation rate. Thus, the school did not make AYP. Schools that were performing well could be unduly identified as “in need of improvement” because of a one or two year dip in their participation rates.
  Note that states will NOT be able to apply these options retroactively to the current year’s accountability determination, school year 2003-2004.